'TIGER ETF' Domestic Equity Covered Call ETF Achieves Top Returns

Mirae Asset Global Investments announced on the 19th that the ‘TIGER Covered Call ETF’ ranked first in year-to-date returns among domestic equity and overseas monthly dividend covered call ETFs, respectively.

According to the Korea Exchange, as of the 18th, the year-to-date return of the TIGER Dividend Covered Call Active ETF was 11.91%, ranking first among domestic investment covered call ETFs.

The TIGER Dividend Covered Call Active ETF invests in high-quality domestic companies with dividend growth potential using a covered call strategy. It focuses on dividend growth stocks that consistently expand shareholder returns through dividends and share buybacks based on steady earnings growth, aiming to balance capital gains and dividend income. It has maintained excellent returns this year and will issue a special dividend at the end of this month.

Amid negative returns in major U.S. indices due to tariffs imposed by U.S. President Donald Trump, the TIGER U.S. Investment Covered Call ETF demonstrated solid defensive capabilities. As of the 18th, the year-to-date return of the TIGER U.S. Dividend Dow Jones Target Covered Call No. 2 ETF was 0.57%, the highest among ETFs investing in U.S. stocks using a covered call strategy with monthly dividends.

This ETF, the first domestic target covered call ETF, invests in the same stocks as SCHD, a leading U.S. dividend stock. Since its listing in July 2023, it paid its first dividend of 89 KRW and recently paid 98 KRW at the end of last month, showing about 10% dividend growth in less than two years.

A covered call is a strategy that involves buying the underlying asset and simultaneously selling call options on that asset. As high-dividend covered call ETFs gain attention, investors should consider total returns rather than simply high distribution rates to ensure the sustainability of covered call ETFs. The distribution source of covered call ETFs is option premiums, and if the performance of the underlying assets and option strategies is poor, there is a risk of reduced dividends and long-term principal erosion.

Kim Su-myeong, head of the Strategic ETF Management Team at Mirae Asset Global Investments, explained, "The monthly cash flow generated from covered call ETFs can be used as funds to invest in other products or serve as a second salary or pension for various purposes." However, he added, "Excessive distributions exceeding the performance of the underlying assets may reduce both dividends and principal. It is important to select appropriate products considering both dividends and capital gains."