As volatility in domestic and global markets has increased, the distributions from covered call exchange-traded funds (ETFs) are also growing. As of mid-month, some monthly distribution ETFs recorded a November distribution rate exceeding 3%. This equates to an annualized distribution rate of 36%. With more investors seeking to secure cash flow from covered call ETFs, the number of mid-month distribution ETFs designed for a twice-monthly distribution strategy is also increasing.
According to financial investment industry sources on the 12th, the November distribution for RISE Korea Value-Up Weekly Fixed Covered Call was disclosed at 420 won, with a distribution rate of 3.25%. Following the ex-distribution date on the 12th and the record date for distribution payment on the 13th, the distribution is scheduled to be paid on the 17th. While the distribution amount decreased compared to last month's 465 won, the distribution rate rose by 0.44 percentage points from 2.81%.
RISE Korea Value-Up Weekly Fixed Covered Call is an ETF that employs a covered call strategy involving the fixed weekly sale of KOSPI 200 call options at a 30% weight against the 100th constituent stocks of the Korea Value-up Program index. As stock prices have risen and market volatility has increased this year, option premium prices have climbed, leading to larger distribution amounts. The distribution amount, which was 105 won in its first payout last October, rose to 190 won in January, 310 won in February, and 400 won in March this year before surging to 590 won in July.
ACE US Big Tech 7 + Daily Target Covered Call (Synthetic) also surpassed a 3.06% distribution rate with a mid-November distribution of 275 won. It has maintained a distribution rate above 3% for six consecutive months since the announcement of a special distribution in June. Korea Investment Management is implementing a special distribution policy for this product and three ACE Daily Target Covered Call funds, paying out additional accumulated distribution resources since their listings starting from June. Consequently, ACE US Semiconductor Daily Target Covered Call (Synthetic) and ACE US 500 Daily Target Covered Call (Synthetic) also recorded high distribution rates of 2.85% and 2.02%, respectively.
In addition, PLUS Tesla Weekly Covered Call Bond Hybrid and KODEX 200 Target Weekly Covered Call recorded mid-November distribution rates of 2.01% and 1.75%, respectively, indicating high levels.
The asset management industry is also introducing new products that differentiate their distribution schedules in response to investment demand for covered call products with high distribution rates. Mirae Asset Global Investments recently listed TIGER 200 Covered Call Active. It features a twice-monthly distribution strategy by offering mid-month distributions on the 15th of each month, alongside TIGER Dividend Covered Call Active, which pays dividends at month-end.
Shinhan Asset Management also listed SOL 200 Covered Call Active, structuring it with mid-month dividends to enable a twice-monthly distribution strategy portfolio alongside SOL 200 Target Weekly Covered Call, which pays dividends based on month-end criteria. Kim Jung-hyun, head of the ETF Business Group at Shinhan Asset Management, explained, "The SOL 200 Covered Call series is composed to respond simultaneously to opportunities for domestic stock price appreciation and demand for monthly distributions, allowing investors to choose management strategies according to their investment objectives."
in STOCK
