Mirae Asset Global Investments, a leading asset manager in Korea, is to launch a covered call exchange-traded fund Tuesday, targeting retirees seeking a stable source of income after retirement.
The asset manager will list the Tiger US Dividend Dow Jones Target Daily Covered Call ETF on the Korea Exchange on Tuesday. As its name suggests, the ETF tracks the stocks of 100 leading companies listed on the Dow Jones US Dividend 100 Index. It targets an annual yield of up to 12 percent.
“With the aging population, more are interested in monthly dividend ETFs to secure income after retirement. Investment in monthly dividend ETFs should be made under a strategy that seeks both cash flow and growth,” Mirae Asset Global Investments Chief Officer Nathan Nam-ki Kim, head of the ETF management business unit, said at a press event held in western Seoul, Monday.
Though most covered call ETFs introduced on the market here are based on a monthly option strategy, the new product works on a daily option covered call, meaning it involves selling call options on a stock daily, seeking the maximum option premium. Meanwhile, the sell option is limited to a 10 percent cap for stability.
"Through the daily covered call strategy, the sell option can be limited to 10 percent and the payout asset can be maximized to 12 percent, enabling stable growth and a strong dividend payout,” said Mirae Asset’s Lee Kyung-jun, who heads the firm's strategic ETF management division.
The ETF pays dividends on the 15th of every month. The asset manager explained that by investing in ETF products with a different payout schedule, such as the 15th or end of every month, investors can secure a stable cash flow.
With the introduction of the ETF, Mirae Asset explained it has completed the lineup for its covered call ETF products that track leading US stock indices, with its assets under management surpassing 1 trillion won ($690 million).
