KB Asset Management Presents 'RISE Covered Call ETF' as Investment Alternative Amid Market Volatility

As volatility in the domestic stock market has increased recently, investors seeking stable monthly cash flow have turned their attention to covered call exchange-traded funds (ETFs). In response, KB Asset Management introduced the 'RISE Covered Call ETF' series as an investment alternative suited for this period of heightened market volatility.

According to KB Asset Management on July 27, the total net assets of domestic covered call ETFs, which stood at approximately KRW 15 trillion at the beginning of this year, have increased by more than KRW 11 trillion in just half a year, reaching KRW 26 trillion.

A covered call ETF is a product that holds underlying assets while selling call options and using the resulting option premiums as resources for distributions. Since option premiums expand as market volatility rises, covered call ETFs are attracting attention as a stable income investment strategy during turbulent market periods like the current one.

KB Asset Management is currently managing a diverse lineup of RISE Covered Call ETFs, including Korea’s major index-based funds, U.S. index-based funds, thematic funds such as those focused on artificial intelligence (AI) and high dividends, as well as bond-type ETFs.

In particular, covered call products based on domestic indices have garnered interest by achieving exceptional performance in addition to providing stable distributions. The RISE 200 High Dividend Covered Call ATM ETF recorded a one-month return of 25.85%, delivering the highest performance among domestic equity ETFs. Furthermore, the RISE Korea Value-Up Weekly Fixed Covered Call ETF announced a distribution of KRW 590 per share (with a monthly distribution yield of 3.30%) as of July, which is its highest since listing, and its six-month return reached 44.77%, demonstrating both stable monthly distributions and outstanding operational performance.

The 'RISE Daily Fixed Covered Call' series, which invests in major U.S. indices and AI/dividend themes, has also grown to a net asset size of about KRW 1.5 trillion, establishing itself as one of the leading overseas covered call product groups.

This series, which includes the US Tech 100, US S&P 500, US AI Value Chain, and US Dividend 100, employs a “third generation covered call” strategy, selling call options equivalent to 10% of the base index's value every day. This approach allows investors to both capture option premiums and participate in the appreciation of the base indices. In the case of the RISE US Tech 100 Daily Fixed Covered Call ETF, the annual distribution rate reaches 19.68%.

Yook Dong-hwi, Head of ETF Product Marketing at KB Asset Management, commented, “In times such as now, when market volatility is on the rise, the strengths of the covered call strategy—which utilizes option premiums—stand out even more. As demand for regular cash flow continues to grow, we will continue to expand the RISE Covered Call ETF lineup, leveraging not only domestic and international benchmark indices, but also a variety of base assets such as AI, dividends, and bonds, in order to broaden investment choices for investors.”

This content was produced with the assistance of AI translation services.