Samsung Asset Management's KODEX US 30-Year Treasury Target Covered Call Surpasses 500 Billion KRW in Net Assets

Samsung Asset Management announced on the 13th that the net assets of the ‘KODEX US 30-Year Treasury Target Covered Call (H)’ exchange-traded fund (ETF) have exceeded 500 billion KRW. This comes just over nine months after its listing at the end of April last year.

The KODEX US 30-Year Treasury Target Covered Call (H) invests in US 30-year Treasury bonds with maturities of over 20 years while simultaneously selling weekly call options at a certain level to secure an annual premium of around 12%. Additionally, interest (coupons) generated from the invested assets and part of the option premiums are reinvested into the assets, thereby relatively increasing the participation rate in price movements.

In fact, this product has paid dividends at a rate of about 1% per month until recently, distributing a total of 826 KRW per share over eight payments. It also applies a total expense ratio of 0.25% per year, which is the lowest among similar covered call strategy products investing in US Treasury bonds.

Thanks to the low total expense ratio and high monthly dividend payments, individual investors have consistently net purchased the KODEX US 30-Year Treasury Target Covered Call (H) on 151 out of 170 trading days since its listing, accumulating nearly 300 billion KRW. Separately, pension investors using DC/IRP accounts are estimated to have contributed about 150 billion KRW.

This product is the only mid-month dividend type among US 30-year Treasury bond products that pays dividends on the 15th, which is believed to reflect the investment preference of individual investors who want to receive monthly dividends spread out over time.

Seobo Kyung, a manager at Samsung Asset Management, said, “Recently, the US bond market has become cautious, reflecting uncertainties about the future policies of the Trump administration, causing the US 30-year Treasury yield to rise close to 5%. However, investors expecting a medium- to long-term decline and stabilization in US interest rates are rather viewing the current situation as an investment opportunity. The preference for covered call products that can provide stable monthly dividends continues mainly among long-term investors.”

Meanwhile, since the KODEX US 30-Year Treasury Target Covered Call (H) pays mid-month dividends based on the 15th of each month, purchasing by the 13th allows investors to receive the monthly dividend on the 17th.