KB Asset Management Launches Two 'Fixed Call Write Ratio Covered Call ETFs'

On the 2nd, KB Asset Management announced the launch of two additional covered call exchange-traded funds (ETFs) with a fixed call selling ratio. The products are the ‘RISE US Tech 100 Daily Fixed Covered Call ETF’ and the ‘RISE US AI Value Chain Daily Fixed Covered Call ETF.’

Previously, the ‘RISE US Dividend 100 Daily Fixed Covered Call ETF,’ launched on the 24th of last month, was the first domestic equity covered call ETF to fix the call selling ratio. It attracted attention from individual investors, recording net individual purchases of 500,000 shares within three days of its launch.

A covered call is a representative options investment strategy that involves buying the underlying asset while simultaneously selling call options. Using covered calls buffers losses by the amount of the option premium when the stock price falls, while limiting returns to a certain level when the stock price rises.

The ‘RISE US Tech 100 Daily Fixed Covered Call’ and ‘RISE US AI Value Chain Daily Fixed Covered Call’ apply a ‘fixed covered call strategy’ by maintaining a low proportion of option sales, allowing participation in the long-term price appreciation of the underlying assets.

Unlike existing covered call products that set a fixed annual target distribution rate, these ETFs fix the call selling ratio at 10% of the underlying assets, selling daily to actively participate in market gains at about 90% while securing monthly distribution funds.

The ‘RISE US Tech 100 Daily Fixed Covered Call’ diversifies investment across the top 100 manufacturing and IT sector companies by market capitalization listed on Nasdaq, while selling 10% of Nasdaq 100 daily call options to pursue both capital gains and income.

The ‘RISE US AI Value Chain Daily Fixed Covered Call’ divides the artificial intelligence (AI) value chain into ‘hardware,’ ‘software,’ and ‘services & infrastructure,’ holding representative stocks in each category at 15%, and invests equally (4.58%) in the four smaller stocks. It also sells 10% of Nasdaq 100 daily call options, using the premiums generated as distribution funds.

Kim Chan-young, Head of ETF Business at KB Asset Management, said, "These two ETFs are products that pursue long-term returns by using leading US technology stocks in the global equity market as underlying assets. Considering the stable monthly distributions through the covered call strategy, they are well suited for installment pension investment products."