Two KODEX Target Weekly Covered Call ETFs Surpass KRW 1.3 Trillion in Net Assets

Samsung Asset Management announced on August 13 that the net assets of the 'KODEX 200 Target Weekly Covered Call' ETF surpassed KRW 900 billion just over eight months after its listing in December last year.

This product invests in the KOSPI 200, aiming to pay out an annual distribution of around 17% by collecting stock dividends from these companies and selling weekly call options on the KOSPI 200 index. Since the beginning of this year, cumulative net purchases by individual investors have reached KRW 640.7 billion.

The KODEX Financial High Dividend TOP10 Target Weekly Covered Call ETF has also grown, with net assets reaching KRW 422.1 billion. This product allows investors to participate in the stock price appreciation of major Korean financial companies while also enjoying stable cash flow through the use of target covered calls.

The strong inflow of funds into these two KODEX Target Weekly Covered Call ETFs can be attributed to their high returns. Among all 43 covered call ETFs, these two have ranked first and second in year-to-date returns. The KODEX Financial High Dividend TOP10 Target Weekly Covered Call ETF maintains a fixed 30% option selling ratio. As a result, it secures an annual distribution base of about 15% while still participating in approximately 70% of upward market movements. With a year-to-date return of 42.7%, it has ranked first among all covered call ETFs.

The KODEX 200 Target Weekly Covered Call ETF has benefited from increased market volatility this year, which has boosted premium income. This allows the ETF to capture targeted premiums even with a lower option selling ratio, enabling greater participation in stock price gains. Its year-to-date return is 30.3%, ranking second among all covered call ETFs.

The rapid growth of these two KODEX Target Weekly Covered Call ETFs is also attributed to the popularity of monthly distributions. The KODEX 200 Target Weekly Covered Call ETF pays out an annual distribution of about 17%, while the KODEX Financial High Dividend TOP10 Target Weekly Covered Call ETF pays about 15%, both distributed monthly. The distribution record dates are set differently: the 15th of each month for the former and the last business day of each month for the latter. By investing in both products simultaneously, investors can establish a cash flow twice a month.

Funds have continued to flow steadily into these products, as they allow participation in rising markets, enable stable receipt of high monthly distributions through target covered calls even in uncertain market conditions, and offer the added benefit of tax exemption on option premium income. Option premium income, which accounts for a significant portion of the monthly distribution, is 100% tax-exempt. Since this premium income is not included in the comprehensive financial income taxation, these ETFs have become attractive investment destinations for high-net-worth individuals who are sensitive to tax issues.

Lee Daehwan, a manager at Samsung Asset Management, introduced the two KODEX Target Weekly Covered Call ETFs as "ETFs suitable for investors who want to participate in stock price appreciation, achieve high returns, maintain stable cash flow, and enjoy tax benefits."

He added, "With financial stocks undergoing a slight correction recently, now appears to be a good time to use target covered call ETFs to invest in a volatile market."