Stable Distribution Strategy in Covered Call ETFs
Samsung Asset Management and Mirae Asset Management operate covered call ETFs based on the KOSPI 200. Samsung’s KODEX 200 Target Weekly Covered Call ETF aims for a 15% distribution rate, highlighting stable distributions and profits, which have attracted a significant number of investors. Consequently, it has achieved a total return of 34.57%.
Conversely, Mirae Asset Management adopts a more conservative strategy with a 7% annual target distribution rate. This approach stems from concerns that excessive distributions could lead to principal erosion over time. It is particularly aimed at providing sustainable returns for investors planning for a 20-30 year pension withdrawal. The differing approaches of the two management firms highlight variations in distribution strategy, catering to diverse investor requirements.
Mirae has introduced two new ETFs, the 'TIGER 200 Target Weekly Covered Call ETF' and 'TIGER Korea Dividend Dow Jones Weekly Covered Call ETF', focusing on a targeted covered call strategy. These ETFs adjust the selling ratio of call options to enhance cash flow stability and offer tax benefits to investors. Such strategies are gaining ground as long-term approaches for consistent principal growth and sustainable profitability.
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