Korea Investment Management's ACE US Semiconductor Daily Target Covered Call (Synthetic) ETF Ranks First in Category Returns

The 'ACE US Semiconductor Daily Target Covered Call (Synthetic)' exchange-traded fund (ETF) from Korea Investment Management has ranked first among overseas covered call products for both 1-year and 6-month returns. The strategy of betting on the rise of U.S. semiconductor stocks while selling call options on the Nasdaq 100 (QQQ)—a so-called 'mismatching' approach—has been particularly effective, according to market assessments.

According to the Korea Exchange on the 18th, as of the previous trading day (the 15th), the 1-year price return (PR) of the ACE US Semiconductor Daily Target Covered Call (Synthetic) ETF was recorded at 112.94%. The total return (TR), which includes distributions, reached 148.07%. This is the highest performance among 37 overseas covered call ETFs listed in Korea, and during this period, the ACE US Semiconductor Daily Target Covered Call (Synthetic) ETF was the only one to exceed 100% in both PR and TR.

The ETF has also shown outstanding short-term performance. Over the past 6 months, the PR was 59.34% and the TR was 73.35%, ranking first in both metrics among similar products. These figures are significantly higher than the average PR (5.82%) and average TR (12.60%) of the 37 comparable products during the same period.

The ACE US Semiconductor Daily Target Covered Call (Synthetic) ETF is a covered call product launched by Korea Investment Management in April 2024. The strategy involves holding the top 30 U.S. semiconductor stocks by market capitalization while selling call options on QQQ (the Nasdaq 100 ETF), thereby seeking both the upside potential of semiconductor stocks and collecting premiums from selling call options.

The ETF’s main investments—the top 30 U.S. semiconductor companies by market capitalization—span five key areas of the semiconductor value chain that are central to the artificial intelligence (AI) infrastructure investment cycle. These five areas are: ▲graphic processing units (GPUs) and AI accelerators, ▲memory, ▲foundry, ▲semiconductor equipment, and ▲fabless and application-specific integrated circuits (ASICs).

Another strength of the ETF is its strategy of utilizing daily options. The ETF sells daily options that expire each day at 1% out-of-the-money (OTM). By using daily options, it can respond more quickly to market changes compared to weekly or monthly options, allowing for the potential to monetize short-term volatility.

Nam Yongsoo, Head of ETF Division at Korea Investment Management, stated, “The ACE US Semiconductor Daily Target Covered Call (Synthetic) ETF employs a strategy of diversified investment across five areas of the semiconductor value chain, enabling it to avoid being swayed by volatility in the memory cycle and to benefit at any stage of the semiconductor supercycle. The ETF is a monthly distribution product, and over the past year, it recorded an average monthly distribution rate of 1.25%. As it allows investors to receive monthly distributions while investing in the promising semiconductor industry, it can be a good choice for long-term investment through accounts such as pension plans.”

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