Mirae Asset Global Investments, which introduced South Korea's first covered-call exchange-traded fund, is preparing an active covered-call product based on the KOSPI 200 index. With the covered-call ETF market expanding rapidly during this year's volatile trading, the asset manager is accelerating its push into the segment with a new product built on the country's benchmark stock index.
Mirae Asset Global Investments plans to launch the TIGER 200 Covered Call Active ETF next month, according to financial investment industry sources on the 20th. The product is expected to build its portfolio around stocks included in the KOSPI 200 index and to employ an active strategy that flexibly adjusts the share of call options sold depending on market conditions. Active products typically carry higher management fees than passive ones, but they allow faster responses to market shifts depending on the manager's capabilities.
A covered-call strategy involves holding underlying assets such as stocks while selling call options to collect premium income. Gains are capped when share prices rise sharply, but active versions focus on preserving the ability to participate in rallies by flexibly adjusting how many options are sold. Unlike the TIGER Dividend Covered Call Active ETF, the firm's flagship product that focuses on selecting dividend stocks, the new offering is expected to be structured to pursue both returns from the stock index itself and option premiums.
The steep growth of the existing product is also cited as a backdrop for the new launch. Net assets of the TIGER Dividend Covered Call Active ETF rose nearly tenfold to 2.4346 trillion won ($1.7 billion) on the 19th of this month from 247.6 billion won on Jan. 2, the first trading day of the year, according to the Korea Exchange. As demand for domestic equity-type active covered-call products expanded, the firm appears to be broadening its investment universe to the benchmark index to widen the range of choices for investors.
Mirae Asset Global Investments pioneered the market in October 2012 by listing the TIGER 200 Covered Call OTM ETF, the country's first covered-call ETF. It introduced a domestic equity-type active covered-call ETF in December 2023 and later expanded its lineup to overseas stock indexes, dividend stocks and bonds. The firm has also been strengthening its domestic equity lineup, listing the TIGER 200 Target Weekly Covered Call ETF in September last year and the TIGER Semiconductor Top 10 Covered Call Active ETF in April this year.
The domestic covered-call ETF market has grown quickly in size as stock market volatility widened sharply in recent months. Net assets of the 62 listed products totaled 27.0532 trillion won as of the previous day, up 79.1% from 15.1087 trillion won at the start of the year, according to the Korea Exchange. The number of products also rose to 62 from 52 over the same period, and six of the 10 newly listed products were active types. With Hanwha and Samsung Asset Management launching KOSPI 200-based active covered-call ETFs in June and July respectively, and Mirae Asset Global Investments now joining, the number of such products is set to rise to three.
The two-way dominance that drives South Korea's ETF market is also pronounced in the covered-call segment. Samsung Asset Management's covered-call ETF net assets stood at 12.1807 trillion won as of the previous day, accounting for 45.0% of the entire market. Mirae Asset Global Investments followed with 9.2149 trillion won, or 34.1%, bringing the two firms' combined share to 79%. "As the market expands, moves to differentiate underlying assets and option management strategies, beyond simple competition over high distribution rates, will become more active," an asset management industry official said.