Hanwha Asset Management's 'PLUS 200 Covered Call Active' Distributions Tax-Exempt for 4 Consecutive Months

Hanwha Asset Management's monthly dividend covered-call exchange-traded fund (ETF), PLUS 200 Covered Call Active, has achieved fully tax-exempt distributions for four consecutive months through its portfolio dividend-avoidance strategy.

On October 30, Hanwha Asset Management said it would pay a distribution of 114 won per share for PLUS 200 Covered Call Active ETF in October.

The monthly distribution rate was 1.86%, based on the closing price on October 28, the day before the ex-distribution date. In particular, with the taxable amount per share calculated at 0 won, investors will receive the full distribution tax-free for the fourth consecutive month, with no tax deducted. The taxable amount per share refers to the amount per share used as the basis for levying tax when dividends or distributions are paid on stocks or ETFs.

The key factor behind the fully tax-exempt distributions is the portfolio's "dividend avoidance" strategy. Rather than directly receiving stock dividends and thereby generating taxable income, this investment approach seeks tax-exempt capital gains, for example by realizing trading profits just before the ex-dividend date.

In fact, PLUS 200 Covered Call Active ETF applied its dividend-avoidance strategy to Samsung Electronics, Korea Carbon and Hyundai Department Store at the end of September, and to Misto Holdings, Youngone Holdings and KT in October. The results were reflected in the October distribution.

PLUS 200 Covered Call Active ETF is a monthly dividend covered-call ETF that seeks monthly cash flow by investing in KOSPI 200 constituent stocks and using a call-option selling strategy. Its active strategy dynamically adjusts the proportion of options sold, their strike prices and their expiration dates according to market conditions.

"Tax-exempt distributions mean investors do not have to worry about their financial income exceeding 20 million won and being included in their comprehensive income, or their health insurance premiums increasing as a result of higher income," said Geum Jeong-seop, head of the ETF Business Division at Hanwha Asset Management. "The fact that distributions from PLUS 200 Covered Call Active ETF have not been taxed clearly demonstrates that the dividend-avoidance strategy is working as intended."

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