New Covered Call Exchange-Traded Funds launched by Mirae Asset
Mirae Asset Launches Two New Sustainable ETF Products
Mirae Asset Global Investments, a leading South Korean asset management firm, has announced the launch of two new exchange-traded funds (ETFs) aimed at providing retirees with sustainable cash flow over a longer time horizon. The new ETF products, named Tiger 200 Target Weekly Covered Call ETF and Tiger Korea Dividend Dow Jones Weekly Covered Call ETF, will be listed on the Korea Exchange on Tuesday.
Nathan Nam-ki Kim, Chief Officer of Mirae Asset Global Investments' ETF portfolio management, plans to provide more detailed disclosures to help investors distinguish between income gains and capital gains. This move is intended to educate investors to establish a long-term investment mindset.
The target covered call strategy is the basis for both new ETFs. This strategy allows investors to generate income by selling call options on owned stocks and setting a predefined target exit price for the underlying shares.
Yoon Byung-ho, head of Mirae Asset's strategic ETF portfolio management division, expressed concerns about potential long-term capital erosion due to the high distribution yield of domestic covered call ETFs. In an effort to address this issue, Mirae Asset's Tiger ETFs are positioning themselves to foster a sound investment culture, particularly in terms of monthly dividend distribution.
While the new ETFs have a lower payout rate than domestic covered call ETFs, they are considered more sustainable. Mirae Asset aims for a steady 7 percent annual distribution rate for the Tiger 200 Target Weekly Covered Call ETF. For the Tiger Korea Dividend Dow Jones Weekly Covered Call ETF, the firm aims for a distribution rate of 10-12 percent, including stock dividends. The average distribution yield of domestic covered call ETFs is 17 percent.
Mirae Asset's Tiger ETFs are not aiming for the high distribution yield that is common among domestic covered call ETFs. Instead, they focus on sustainable cash flow and capital growth. Both new ETFs are focusing on sustainable payout.
In a separate development, Hanwha Asset Management also held a press briefing in central Seoul on Thursday to introduce their two new covered call ETFs focusing on sustainable spending. The details of these ETFs were not disclosed at the time of writing.
With these new launches, Mirae Asset Global Investments continues to demonstrate its commitment to innovation and sustainability in the ETF market.
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