High-dividend covered call and China biotech exchange-traded funds (ETFs) led performance in the Korean KOSPI market during the period from June 19 to July 21, according to data from the financial investment industry released on July 22. The outperformance occurred as AI semiconductor stocks, which had previously led market gains, weakened, prompting investors to diversify risk. China biotech companies' partnerships with global pharmaceutical firms and relatively strong earnings drove sector gains. Top performers included TIGER Global AI Cybersecurity (18.15%), RISE 200 High Dividend Covered Call ATM (15.51%), and TIGER China Biotech SOLACTIVE (14.02%), while semiconductor and infrastructure ETFs underperformed during the same period.
High-Dividend Covered Call and China Biotech ETFs Lead KOSPI Performance Rankings
The top-performing ETFs during the recent one-month period showed a clear shift toward defensive themes. According to financial investment industry data, the rankings were: TIGER Global AI Cybersecurity at 18.15%, RISE 200 High Dividend Covered Call ATM at 15.51%, TIGER China Biotech SOLACTIVE at 14.02%, PLUS High Dividend Weekly Covered Call at 11.01%, RISE US S&P Oil Production Companies (Synthetic H) at 10.49%, and KoAct China Bio Healthcare Active at 10.47%.
High-dividend covered call ETFs demonstrated notable strength. These products hold high-dividend-yielding companies as underlying assets while selling call options to generate additional income. Among the top 100 ETFs by performance, dividend and covered call themes accounted for 31%, biotech for 15%, commodities and energy for 11%, banking and finance for 8%, and China-focused funds for 6%. Semiconductor-themed ETFs were absent from the top 100.
Covered Call Strategy Mechanics Limit Downside Through Premium Collection
Covered call ETFs generate income by selling call options, which are rights to purchase stocks at a specific price. Selling these options produces premium income regardless of stock price movements, providing a buffer against declines. While this strategy limits upside potential, it creates cash flow and reduces volatility. When combined with high-dividend stocks, the approach generates income from both dividends and option premiums.
A Hanwha Asset Management representative explained that PLUS High Dividend Weekly Covered Call holds high-dividend companies as underlying assets and sells KOSPI 200 call options at 100%. The representative stated that the underlying high-dividend stocks experienced relatively small price movements, and the call option sales during the KOSPI 200 decline helped cushion the downside impact. The representative added that after distributing income, resources were reinvested to further mitigate losses.
China Biotech Firms Secure Major Global Pharmaceutical Partnerships
China biotech ETFs gained investor attention alongside defensive dividend strategies. TIGER China Biotech SOLACTIVE and KoAct China Bio Healthcare Active, which ranked third and sixth respectively, invest in major Chinese biotech companies. The sector benefited from expanded global partnerships. In May, China's Innovent Biologics signed a partnership with Pfizer worth approximately $10.5 billion (about 15 trillion won) in the oncology field. On July 14 (local time), Dizal Pharmaceuticals entered a global exclusive licensing agreement with AstraZeneca worth up to $1.5 billion (approximately 2.23 trillion won) for lung cancer treatments.
A Mirae Asset Asset Management representative stated that China's pharmaceutical technology exports in the first half of 2026 reached approximately $99.7 billion (about 147.6 trillion won), achieving 73% of 2025's full-year total in just half a year. The representative noted that eight of the top 10 global pharmaceutical deals involved Chinese companies, with major firms including AstraZeneca, Pfizer, and Eli Lilly signing contracts with Chinese biotech companies. The representative added that increased capital flows from mainland China also boosted related ETF returns.
Experts Recommend Rotation Strategy Into Defensive and Alternative Themes
Industry experts emphasized the importance of alternative investment strategies to diversify risk during semiconductor weakness. The approach involves rotating capital into income-generating ETFs such as dividend and covered call products, as well as non-semiconductor themes including biotech and China-focused funds.
The Hanwha Asset Management representative stated that in situations where market-leading stocks underperform, high-dividend theme ETFs and covered call ETFs that distribute income can recover some losses. The representative emphasized that covered call ETFs with high-dividend stocks as underlying assets can show better performance than KOSPI 200 during large-cap stock declines, as high-dividend stocks tend to have smaller price declines.
The Mirae Asset Asset Management representative stated that in addition to safe assets like gold, bonds, and the dollar that defend against overall market declines during semiconductor weakness, alternative investment strategies considering capital rotation away from semiconductors are important. The representative noted that considering China biotech's recent strength and relative outperformance as semiconductor industry conditions weakened, products like TIGER China Biotech SOLACTIVE within the TIGER lineup can be utilized as rotation strategies.
FAQ
What caused high-dividend covered call ETFs to outperform during the June 19 - July 21 period?
High-dividend covered call ETFs outperformed because their underlying high-dividend stocks experienced relatively small price movements compared to semiconductor stocks, and the call option premiums collected during the KOSPI 200 decline helped cushion downside losses. The strategy combines dividend income with option premiums to create cash flow while limiting volatility.
Why did China biotech ETFs gain during this period?
China biotech ETFs gained due to major global pharmaceutical partnerships announced during the period. Innovent Biologics signed a $10.5 billion partnership with Pfizer in May, and Dizal Pharmaceuticals entered a $1.5 billion licensing agreement with AstraZeneca on July 14. China's pharmaceutical technology exports reached $99.7 billion in the first half of 2026, with eight of the top 10 global pharmaceutical deals involving Chinese companies.
What rotation strategies do experts recommend during semiconductor weakness?
Experts recommend rotating capital into defensive themes including high-dividend and covered call ETFs that generate income through distributions, as well as alternative themes like China biotech that show relative strength when semiconductors weaken. Safe assets like gold, bonds, and the dollar are also recommended to defend against overall market declines.
