KODEX 200 Target Weekly Covered Call ETF Surpasses 1 Trillion Won in Cumulative Net Purchases by Individual Investors This Year

Exchange-traded funds (ETFs) that offer high annual distributions of around 17%, while also providing the benefits of the KOSPI200’s upward momentum and tax advantages, continue to gain steady popularity.

On November 20, Samsung Asset Management announced that the KODEX 200 Target Weekly Covered Call ETF recorded a cumulative net purchase by individual investors of 1.0656 trillion won so far this year. Thanks to consistent buying from individual investors, the KODEX 200 Target Weekly Covered Call ETF, which was listed in December last year, reached 1.507 trillion won in net assets in just 11 months.

Since the beginning of the year, its performance has also ranked at the top among covered call ETFs. The year-to-date return for the KODEX 200 Target Weekly Covered Call ETF stands at 57.9%, ranking first among all 49 covered call ETFs listed in Korea.

The domestic stock market has shown an upward trend this year, but has recently undergone a correction. This ETF is attracting investor interest as it allows for stable option premium and dividend income, while still participating significantly in market gains.

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

One advantage is that option premium income is tax-exempt when investing through a regular account and is not included in comprehensive financial income taxation. As a result, there has been strong interest from high-net-worth investors who require a certain level of monthly cash flow. However, the approximately 2% annual dividend income is subject to dividend income tax.

Lee Daehwan, a manager at Samsung Asset Management, said, "After the KOSPI surpassed 4,000 recently and the market paused, individual investors have been investing in strategic products like the KODEX 200 Target Weekly Covered Call ETF, which allows them to enjoy stable monthly distributions while also participating in market gains."

He added, "With the KODEX 200 Target Weekly Covered Call ETF, investors can manage option premium tax exemption, market participation, and a monthly distribution strategy all within a single ETF."

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