'K-SCHD' Set to Launch: Will It Be a Helping Hand Amid Market Volatility?

TIGER Korea Dividend Dow Jones Listing D-1
"Aiming for Both Dividend Growth and Return"

As the "Korean version of SCHD (K-SCHD)," which models itself on the investment strategy of the global dividend ETF leader SCHD, is set to be listed on the domestic stock market on May 20, there is growing interest in whether it can establish itself as a "helping hand" for investors' portfolios amid the current volatile market conditions.

On May 19, Mirae Asset Global Investments held a seminar at the Westin Chosun Seoul with the Korea Exchange and S&P Dow Jones, under the theme "Income Strategies for a Changing Market," and introduced the "TIGER Korea Dividend Dow Jones" ETF, which is modeled after "K-SCHD."

This ETF selects 30 companies with a market capitalization of at least 1 trillion won that have paid dividends for 10 consecutive years and have consistently increased their dividends over the past five years.

Jung Hyeonjeong, Head of ETF Management at Mirae Asset Global Investments, explained the background of the launch, saying, "As market volatility has increased recently, demand for stable cash flow has risen. At the same time, the tax deferral effect of overseas funds in tax-advantaged accounts has weakened, drawing attention to domestic high-dividend stocks, which carry a lighter tax burden."

In fact, the Korean market is showing strong interest in dividend strategies. The assets under management (AUM) of dividend ETFs in Korea have increased twentyfold over the past 10 years, reaching a record high of 6.7 trillion won as of the end of last year. From the beginning of this year through last month, individual investors' cumulative net purchases of high-dividend ETFs amounted to about 340 billion won, already reaching 80% of the total net purchases for 2024 (about 410 billion won). According to Save-ro, the securities information portal of the Korea Securities Depository, as of May 16, the net purchase volume of SCHD by Korean retail investors over the past month was $150 million (about 209.5 billion won), ranking second overall.

Shin Donghoon, Head of the Index Business Team at the Korea Exchange, stated, "Over the past three years, the average annual growth rate of income-based products in the domestic ETF market has been 67%, far exceeding the overall market average growth rate of 21.8%." He added, "In particular, for covered call products, assets under management have increased by more than 190% during this period, and the growth trend in AUM for major products continues."

As the volatility in the stock market triggered by U.S.-imposed tariffs gradually subsides, there is renewed interest in covered call strategies. Analysts point out that in a sideways market, where the market direction is unclear, covered call products that provide steady cash flow can be an effective investment option. Jason Yeh, Director of Strategy Indices for Asia-Pacific at S&P Dow Jones Indices, emphasized, "Data over the past 100 years shows that high-dividend strategies have outperformed the market by more than 70%. In Korea, more than half of stock returns over the past 15 years have come from dividends. I am confident that ETF strategies combining high dividends and covered calls will succeed in the Korean market going forward."

Kim Beomseok, Korea Country Head at S&P Dow Jones Indices, said, "With market volatility and external uncertainties increasing, the importance of income strategies for stable cash flow has grown even more." He added, "Since various income strategies such as dividends and option premiums are effective in improving returns and diversifying risk, we will focus on developing income strategy models tailored to the Korean market."