Samsung Asset Management's Two KODEX Target Weekly Covered Call ETFs Surpass 800 Billion KRW in Net Assets

The combined net assets of Samsung Asset Management's two flagship covered call ETFs have surpassed 800 billion KRW. Analysts attribute the influx of investment within just half a year since listing to these ETFs' ability to provide stable monthly distributions amid uncertain market conditions, as well as the tax exemption on option premium income.

On June 19, Samsung Asset Management announced that the net assets of the "KODEX 200 Target Weekly Covered Call," which was listed on December 3 last year, have reached 523.3 billion KRW. This product invests in the KOSPI 200, which represents the Korean stock market, and aims to provide an annual distribution of around 17% by collecting both dividends from these companies and premiums from selling weekly call options on the KOSPI 200 index.

Since listing, steady buying by individual investors has resulted in a cumulative net purchase of 314.3 billion KRW by individuals so far this year. Among the 42 covered call ETFs listed on the domestic stock market, this product ranks first. It also ranks sixth among all ETFs in terms of net purchases by individual investors, solidifying its position as a leading covered call ETF.

The "KODEX Financial High Dividend TOP10 Target Weekly Covered Call," which allows investors to benefit from both stock price appreciation and stable cash flow by investing in leading domestic financial companies, has recorded net assets of 313.8 billion KRW, surpassing the 300 billion KRW mark. This achievement comes approximately six months after its listing on December 17 last year.

This ETF actively participates in the stock price appreciation of financial companies and targets an annual distribution rate of about 15%. Unlike traditional high-dividend ETFs, which are fully taxed on distributions, this product offers the advantage that the portion of the distribution derived from option premium income is tax-exempt. The KODEX Financial High Dividend TOP10 Target Weekly Covered Call has posted a return of 29.3% year-to-date, ranking first among all 42 covered call ETFs.

Samsung Asset Management first attracted investor attention by listing domestic equity target covered call ETFs in December last year. These target covered call ETFs have rapidly increased their net assets within six months of listing, meeting the demand for stable monthly income products amid market uncertainty. The popularity of these products can be attributed to three main factors.

The first factor is the predictable and stable monthly distribution income. The KODEX 200 Target Weekly Covered Call aims for an annual distribution rate of 17%, combining option premiums and stock dividends, and pays a monthly distribution of about 1.42%. The KODEX Financial High Dividend TOP10 Target Weekly Covered Call targets an annual rate of 15%, paying about 1.25% each month. The distribution reference dates for the two products are set differently?on the 15th of each month and the last business day, respectively?allowing investors to establish two monthly cash flows by investing in both products simultaneously.

The second factor is the tax exemption benefit. Option premium income, which accounts for a significant portion of the monthly distribution, is 100% tax-exempt. Since premium income is not included in the comprehensive financial income tax base, these products are becoming attractive investment options for high-net-worth individuals who are sensitive to taxes. As a result, investors have given these products the nickname "tax-saving master."

The third factor is the ability to participate in the rising domestic stock market, which has remained strong even before the launch of the new administration. Traditional covered call products have the drawback of making it difficult to benefit from stock price appreciation in exchange for monthly distributions. However, Samsung Asset Management's KODEX Target Covered Call ETFs are designed with a lower proportion of call options, allowing investors to participate to some extent in stock price gains, making them effective products even in a rising market.