Samsung KODEX 200 Target Weekly Covered Call ETF Surpasses 300 Billion KRW in Cumulative Net Individual Purchases

As recent progress has been made in U.S. tariff negotiations, expectations are rising that tariff burdens on Korean companies will be eased, bringing a positive sentiment to the domestic stock market. Individual investors are flocking to ETFs that offer an annual distribution rate of around 17%, while also enjoying the benefits of the KOSPI200's upward momentum and tax advantages.

On May 14, Samsung Asset Management announced that the cumulative net purchases by individual investors in the 'KODEX 200 Target Weekly Covered Call' ETF surpassed 300 billion KRW just over five months after its listing. Since the beginning of this year, it has ranked first in net purchases by individuals among domestic equity ETFs, and fifth overall among all ETFs, including bond types.

Thanks to the steady buying by individual investors, the net asset value of the KODEX 200 Target Weekly Covered Call ETF has exceeded 400 billion KRW. This represents an 855% surge compared to the end of last year. This is seen as a reflection of continued investment demand from individual investors who are accumulating this ETF, which specializes in monthly distributions. The stable monthly payouts, tax exemption benefits, and participation in the KOSPI200 index's gains?all features of the product's differentiated design?have contributed to this result.

The KODEX 200 Target Weekly Covered Call uses the KOSPI200 index as its underlying asset and seeks to generate an annual option premium income of about 15% by selling call options on a weekly basis. By adding a dividend yield of about 2% from investing in KOSPI200 constituents, it provides an annual distribution rate of around 17%. This is divided over 12 months, resulting in a monthly average distribution of approximately 1.42%.

When investing through a regular account, the option premium income is tax-exempt and is not included in the comprehensive financial income tax base. This advantage has attracted significant interest, particularly among high-net-worth individuals who require a steady monthly cash flow. However, the approximately 2% annual dividend income is subject to dividend income tax.

While covered call ETFs generally allow investors to expect premium income from option selling, many of these products do not participate in gains if the underlying asset price rises. The KODEX 200 Target Weekly Covered Call dynamically adjusts the proportion of call options sold to achieve its annual 15% premium target. The portion of stocks not covered by option sales is designed to participate directly in the KOSPI200's gains. In periods of increased market volatility, weekly option premiums become higher, resulting in a reduced proportion of option sales and a greater participation in the market's upward movement.

Lee Daehwan, a manager at Samsung Asset Management, stated, "As demand for monthly distribution ETFs grows, the KODEX 200 Target Weekly Covered Call has established itself as an investment strategy for high-net-worth individuals who are sensitive to taxes," and added, "Target Weekly Covered Call ETFs, which offer tax exemption advantages while also participating in stock price gains, continue to grow."

As trading in the weekly options market becomes more active, overall liquidity in the derivatives market is improving. The trading volume of weekly options based on the KOSPI200 is now either exceeding or matching that of the traditional monthly options market. This trend, coupled with the popularity of weekly option-based products, is seen as contributing to the expansion of market participants and liquidity.