Samsung KODEX 200 Target Weekly Covered Call, No.1 Individual Net Buyer This Year

Amid the recent growth of covered call ETFs, domestic equity covered call ETFs are creating a sensation in particular. As individual investors begin to recognize the 'tax-exempt benefits,' domestic asset ETFs are overtaking overseas asset covered call ETFs, which had previously been the mainstream.

On the 14th, Samsung Asset Management announced that the KODEX 200 Target Weekly Covered Call ETF recorded a cumulative net purchase of 139 billion KRW by individual investors this year, ranking first among 39 covered call products in total. This is the first case among domestic asset covered call ETFs, and considering that investor preference for domestic covered call products had been low compared to overseas ones, it is regarded as an unusual situation.

The KODEX 200 Target Weekly Covered Call ETF is the first target covered call ETF introduced domestically, utilizing the KOSPI 200 and on-exchange derivatives. After its listing at the end of last year, it achieved net assets of 200 billion KRW within two months. As of the 13th, it has grown to 322.3 billion KRW in net assets. Aiming for a 15% annual premium income, it flexibly adjusts the weekly call option selling ratio on the KOSPI 200, allowing partial participation in the index's rise when the KOSPI 200 index increases. Since it also pays monthly distributions by combining dividends from KOSPI 200 stocks, expected to be around 2% annually, the actual expected distribution yield reaches 17% per year.

What attracts individual investors is that the expected premium income of 15% generated from selling call options and the capital gains from holding domestic stocks are tax-exempt. Since the main asset income is subject to tax exemption, it is especially favored by cash-rich asset holders sensitive to comprehensive financial income taxation. However, dividend income, expected to be around 2% annually, is subject to dividend income tax.

The cumulative net purchase volume by individuals for all 39 covered call ETFs rapidly grew to 1.3045 trillion KRW in about 70 days until the 13th, following 3.6768 trillion KRW last year. As the tax-exempt benefits of domestic covered call products began to be recognized, the net purchase volume of domestic asset ETFs by individuals reached 289.9 billion KRW during the same period, exceeding 75% of last year's total market. The share of domestic asset ETFs in the overall covered call ETF market, including overseas, is about 22%, more than doubling from around 10% last year.

The KODEX Financial High Dividend TOP10 Target Weekly Covered Call ETF has supported the growth of domestic asset covered call ETFs by recording 79 billion KRW in individual net purchases this year. This ETF selectively invests in the top 10 high-dividend companies among financial stocks such as banks, insurance, and securities. It is a monthly dividend product aiming for distributions of up to 15% annually (1.25% monthly) by combining dividends and option premiums. This ETF also surpassed 200 billion KRW in net assets about three months after its listing on December 17 last year and grew to 207.8 billion KRW as of the 13th.

Lee Daehwan, manager at Samsung Asset Management, said, "Since the beginning of the year, individual net purchases of 10 KODEX covered call ETFs have reached 650 billion KRW, accounting for 50% of all covered call products, showing that KODEX products are highly favored by investors."

He added, "Until last year, covered calls linked to overseas assets were the trend, but recently, funds are flowing rapidly into domestic asset-linked covered call products that pursue monthly high dividends and additional income through domestic stock capital gains and on-exchange derivatives without taxes."

This content was produced with the assistance of AI translation services.