The Aug. 31 launch follows CSOP’s July KOSPI 200 ETF debut and targets income-focused exposure to South Korean equities as market volatility lifts options-premium potential.
CSOP Asset Management has expanded its South Korea-focused exchange-traded fund lineup by listing the CSOP KOSPI 200 Covered Call Active on Hong Kong Exchanges and Clearing Ltd. on Aug. 31. The product was listed at about HK$7.8 per unit, trades in board lots of 100 units and charges an annual management fee of 0.99%. The fund uses swaps, KOSPI 200 futures and KOSPI 200 ETFs to track the KOSPI 200 while selling related call options to collect premium income. The structure is designed to provide partial participation in gains and monthly distributions, while potentially cushioning losses in weaker markets through options premiums, though upside can be capped during sharp rallies. CSOP said higher recent volatility in South Korean stocks was a key reason for the launch because elevated volatility tends to increase call-option premiums. Seoul Economic Daily reported the KOSPI 200’s annualized volatility has risen above 60% this year, while the year-to-date return for the KOSPI 200 covered-call strategy has exceeded 25%. Global KOSPI 200 covered-call ETFs also recorded net inflows of about 2 trillion won, or roughly $1.4 billion, in the first quarter, pointing to stronger investor demand. The launch comes as Hong Kong’s covered-call ETF segment attracts fresh money. Year to date, covered-call ETFs listed in Hong Kong have drawn HK$22.6 billion in net inflows, including HK$10.3 billion for CSOP’s HSCEI Covered Call Active ETF. CSOP Chief Executive Officer Ding Chen said the new product would offer monthly distributions while seeking portfolio stability and income returns in a volatile South Korean market. The listing further broadens CSOP’s Korea-linked product range in Hong Kong after its KOSPI 200 ETF debut in July and last year’s launch of what it described as the world’s first single-stock leveraged ETFs tied to Samsung Electronics Co. and SK Hynix Inc. A CSOP representative said direct capital flows from Hong Kong investors into South Korea could improve foreign investor access to the Korean stock market and support market supply and demand dynamics.