Hanwha Asset Management launched the 'PLUS 200 Covered Call Active' ETF on the 23rd of last month, employing a flexible option-selling strategy and dividend-avoidance approach to navigate volatile stock markets. The fund reached net assets of 55.324 billion won as of the 23rd, according to Korea Exchange data released on the 26th. Manager Kim Eun-chong stated the strategy reduces option-selling during price rallies to maximize upside participation while using dividend avoidance to eliminate the 15.4% dividend income tax burden. Covered call ETFs attract investor attention during high market volatility because option premiums provide downside cushioning when stocks move sideways or decline, though upside gains are capped in strong rallies. The product holds Samsung Electronics (33.33%) and SK Hynix (28.24%) as its top two positions, representing over 60% of total assets, with additional allocations to SK Square (2.89%), Samsung Electro-Mechanics (2.16%), Hyundai Motor (1.56%), KB Financial (1.40%), and Shinhan Financial Group (1.11%).
Fund Reaches 55.324 Billion Won in Net Assets as of the 23rd
The 'PLUS 200 Covered Call Active' ETF recorded net assets of 55.324 billion won as of the 23rd, Korea Exchange data showed on the 26th. The fund surpassed 50 billion won in net assets on the 9th, approximately two weeks after its listing on the 23rd of last month. Samsung Electronics accounts for 33.33% of holdings and SK Hynix represents 28.24%, together comprising more than 60% of the portfolio. Other holdings include SK Square at 2.89%, Samsung Electro-Mechanics at 2.16%, Hyundai Motor at 1.56%, KB Financial at 1.40%, and Shinhan Financial Group at 1.11%.
Manager Kim Eun-chong Explains Flexible Option-Selling Strategy
Kim Eun-chong, manager of Hanwha Asset Management's ETF Operations Team, stated the fund focuses on maximizing upside participation by reducing option-selling ratios during stock price increases and selling out-of-the-money (OTM) options. "We flexibly adjust option-selling ratios, strike prices, and maturities according to market conditions," Kim said. Hanwha Asset Management emphasized that option-selling strategy becomes more critical during volatile markets — option premiums support income during downturns and sideways movements, while the strategy must enhance upside participation when indices rise.
Dividend Avoidance Strategy Eliminates 15.4% Tax Burden
The fund differentiates itself through a dividend-avoidance strategy that sells holdings before ex-dividend dates and repurchases them on ex-dividend dates, avoiding the 15.4% dividend income tax. "Covered call ETFs typically source distributions from stock dividends and option premiums, but stock dividends are subject to taxation," Kim explained. "Using dividend avoidance minimizes the taxable portion because we do not receive dividends." Kim added that option premiums from domestic exchange-traded derivatives qualify as non-taxable income under current tax regulations. "We aim to reduce the proportion of taxable dividend income in monthly distributions and increase the proportion of non-taxable sources," Kim stated.
FAQ
What is the 'PLUS 200 Covered Call Active' ETF launched by Hanwha Asset Management?
Hanwha Asset Management launched the 'PLUS 200 Covered Call Active' ETF on the 23rd of last month. The fund uses a flexible option-selling strategy and dividend-avoidance approach, holding Samsung Electronics (33.33%) and SK Hynix (28.24%) as its top positions. Net assets reached 55.324 billion won as of the 23rd, according to Korea Exchange data released on the 26th.
How does the dividend-avoidance strategy reduce tax burden?
Manager Kim Eun-chong stated the fund sells holdings before ex-dividend dates and repurchases them on ex-dividend dates to avoid receiving dividends, eliminating the 15.4% dividend income tax. Kim explained that option premiums from domestic exchange-traded derivatives qualify as non-taxable income under current tax regulations, allowing the fund to increase the proportion of non-taxable sources in monthly distributions.
