Samsung KODEX 200 Target Weekly Covered Call, Net Assets Reach 100 Billion Won in Two Months

Samsung Asset Management announced on the 31st that the net assets of ‘KODEX 200 Target Weekly Covered Call,’ the first domestic target covered call ETF, have surpassed 100 billion KRW. Since its listing in December last year, the ETF has recorded a cumulative net purchase by individuals of 49.1 billion KRW and net assets of 105.3 billion KRW.

KODEX 200 Target Weekly Covered Call is the first domestic target covered call ETF utilizing the KOSPI 200. It is designed to flexibly adjust the weekly call option selling ratio with a target premium of 15% per year, allowing partial participation in the rise of the KOSPI 200 index. In addition to the 15% annual premium, it pays approximately 17% annual distributions monthly on the 15th, including the dividend yield of KOSPI 200 stocks. The first distribution was made on January 15, with 202 KRW per share and a dividend yield of 2.05%.

Individual investors have shown steady buying interest in KODEX 200 Target Weekly Covered Call due to its high monthly dividend rate of up to 17% annually and the advantage of partial participation in the KOSPI 200 index’s rise. It is also known that most of the dividend income and any future separate capital gains enjoy tax-exempt benefits.

For domestic equity covered call ETFs like KODEX 200 Target Weekly Covered Call, both capital gains and call option premium income are tax-exempt. Since only the portion of the portfolio’s dividend income within the distribution is taxable, the tax burden on monthly distributions is significantly reduced, making it highly popular among large investors seeking monthly cash flow in general accounts.

Of the product’s target annual 17% (1.42% monthly) distribution, the 15% corresponding to the option premium is tax-exempt, so only about 2% is subject to a 15.4% tax. For an individual investor investing 500 million KRW in a general account receiving approximately 7.1 million KRW in pre-tax monthly distributions, about 6.9 million KRW is received after deducting around 150,000 KRW in taxes. If there is no interest or dividend income from other products, the investor would receive about 85 million KRW pre-tax and 83 million KRW post-tax annually from monthly dividends alone.

The popularity of KODEX 200 Target Weekly Covered Call has extended to the KODEX Financial High Dividend TOP10 Target Weekly Covered Call ETF. Since its listing on the 17th of last month, it has seen continuous net purchases by individuals, accumulating net purchases of 32.2 billion KRW. The KODEX Financial High Dividend TOP10 Target Weekly Covered Call allows participation in the rise of financial stocks, which have announced record dividends and share buybacks due to expanded shareholder return policies, while providing a 15% annual distribution paid monthly at the end of each month.

Lee Daehwan, manager at Samsung Asset Management, introduced, "KODEX 200 Target Weekly Covered Call is the first domestic asset-linked target covered call product created for domestic stock investors who prefer stable long-term cash flow or cash-rich individuals lacking pension assets by utilizing domestic tax benefits."