Boosting exposure to market leaders and flexibly managing options: Shinhan Asset Management lists covered-call ETF

[Financial News] A new active covered-call exchange-traded fund (ETF) is coming to market, increasing the weights of leading stocks in the KOSPI 200 and adjusting its option-selling strategy to market conditions. Its distribution schedule differs from that of an existing product, allowing investors who use both to generate cash flow twice a month, at the beginning and middle of the month.
Shinhan Asset Management said on the 10th that it would newly list the SOL 200 Covered Call Active ETF on the KOSPI market.
The product invests in domestic stocks, focusing on the KOSPI 200, and uses premiums earned from selling call options to fund monthly distributions. It adjusts both its stock portfolio and option strategy to market conditions, seeking regular cash flow as well as returns above its benchmark.
On the equity side, the fund increases the weights of market-leading stocks, taking into account the earnings and valuations of KOSPI 200 constituents, supply-and-demand conditions, and industry-specific growth drivers. It also adjusts its allocations in response to sector stock-price trends and shifts among market leaders.
The fund also flexibly adjusts its option-selling strategy based on its market outlook, volatility, and option premium levels. Rather than selling call options uniformly, it seeks to balance the potential to participate in stock-price gains with the need to secure funds for monthly distributions.
With this listing, Shinhan Asset Management will have two domestic equity covered-call ETFs, including its existing Shinhan SOL 200 Target Weekly Covered Call ETF. The Shinhan SOL 200 Target Weekly Covered Call ETF targets annual option premiums of around 15% and has recorded monthly distribution rates of around 1.3%–1.4% since its first distribution last April.
The two products also have different distribution schedules. The Shinhan SOL 200 Target Weekly Covered Call ETF is expected to pay distributions at the beginning of each month, while the SOL 200 Covered Call Active ETF is expected to pay them on the 16th of each month. Investors using both products can receive distributions twice a month. The first distribution from the SOL 200 Covered Call Active ETF is scheduled for the 16th of next month.
The two products can also take advantage of the tax treatment available to domestic equity covered-call ETFs: in regular taxable accounts, gains from trading domestically listed stocks and domestic stock-index options are excluded from taxation. However, taxes apply to taxable sources of income, such as stock dividends, and the actual taxable amount varies depending on the tax-basis price and distribution details.
Kim Jeong-hyeon, head of Shinhan Asset Management’s ETF Business Group, said, “This product offers greater flexibility in managing equities and options to address both opportunities for gains in domestic stocks and demand for monthly distributions.” He added, “We have differentiated it from the existing product in its management approach and distribution schedule so that investors can use it in line with their investment objectives and cash-flow needs.”
[email protected] Bae Han-geul Reporter