Mirae Asset to launch new covered call ETF for retirees

Mirae Asset Global Investments, Korea’s leading asset management firm, will launch a new covered call exchange-traded fund that generates monthly income to target investors who are seeking steady income to prepare for retirement.

The asset manager is to list the Tiger US Nasdaq-100+ 15% Premium Daily Option ETF on the Korea Exchange on Tuesday. The 100 billion won ($72 million) ETF product tracks US large-cap index Nasdaq-100, which consists of the 100 largest nonfinancial companies listed on the tech and innovation-focused Nasdaq.

The covered call ETF is based on an options trading strategy that allows an investor to profit from anticipated price rises by selling call options on owned stocks, securing a certain level of dividends. Mirae Asset aims for a steady 15 percent annual distribution rate with the product.

“If we could travel back in time and make an investment with only one underlying asset, it would be Nasdaq-100. Companies listed on Nasdaq-100 have led the waves of innovation over the past years, such as Microsoft, Qualcomm, Apple, Tesla and Netflix,” Mirae Asset’s Lee Kyung-jun, who heads the firm's strategic ETF management division, said at a press event held at the Mirae Asset Center 1 building in central Seoul.

"We can say companies on the Nasdaq-100 will continue to take the lead of innovation in the postAI era," Lee said. "Through the ETF product, investors can anticipate a continuous dividend payment while riding on the growth of Nasdaq-100, which invests in innovative companies across a wide range of sectors."

Unlike other synthetic ETFs that pool funds in swaps with brokerage firms, Mirae Asset directly manages the options itself, cutting down on costs.

"Asset managers usually deduct the pay for synthetic management, which costs between 1-3 percent of the earnings. This is a hidden cost. But Mirae Asset trades options itself, eliminating additional expenses," Lee said.

Lee projected investors who are preparing for retirement to take an interest in the product as it is designed to yield a relatively stable monthly income, generating steady cash flow.

Mirae Asset Global Investments will continue to introduce diverse monthly dividend ETF products, the firm explained. As of the end of May, Korea’s monthly dividend ETF market stood at 8.8 trillion won, with products under Mirae Asset’s Tiger ETF brand taking up 48.8 percent of the market share.

"Investors should choose monthly dividend ETFs that target benchmark indices, considering both portfolio diversification and expenses," Mirae Asset Global Investments Vice Chairman Lee Jun-yong said. "Mirae Asset Global Investments will strive to become a long-term partner of investors with its experience in the Tiger ETF brand.”