Hang Seng Investment Management Limited has listed two new exchange-traded funds on the Hong Kong Exchange today. The Hang Seng H-Share Index Covered Call Active ETF (03519) and the Hang Seng Tech Index Covered Call Active ETF (03589) began trading on May 8th. These new ETFs are designed to generate income for investors in volatile market conditions by combining equity investments with an active covered call strategy, with the objective of providing monthly distributions. It is important to note that the distribution yield is not guaranteed, and dividends may be paid from capital.

The newly launched ETFs are actively managed. The Hang Seng H-Share Index Covered Call Active ETF invests in mainland enterprises listed in Hong Kong, while the Hang Seng Tech Index Covered Call Active ETF focuses on technology companies listed in the city. In addition to potential stock dividends, both ETFs will seek to generate premium income by actively writing call options on the Hang Seng China Enterprises Index and the Hang Seng Tech Index, respectively.

The issue price for the Hang Seng H-Share Index Covered Call Active ETF and the Hang Seng Tech Index Covered Call Active ETF is HK$9.6 and HK$8.6 per unit, respectively. Both ETFs are traded in board lots of 100 units. The maximum total management fee for the listed class units of each ETF is 0.7% per annum, with an estimated ongoing charges figure of 1.1% per year.

Commenting on the launch, a company executive stated that in a climate of persistent market volatility, many investors are seeking investment solutions that offer income generation alongside risk mitigation. The introduction of these new active covered call ETFs complements the firm's existing suite of high-yield products and further diversifies its range of ETF offerings. By actively managing the writing of at-the-money and out-of-the-money call options, the ETFs aim to enhance potential returns while partially offsetting downside volatility of the underlying stock holdings. Their performance has the potential to outperform passive index strategies during sideways or declining markets, with potentially lower volatility.