The money manager Mirae Asset Global Investments will soon enter the fray in the U.S. markets as the company prepares to launch three new exchange traded funds based on covered-call strategies.
The Horizons ETF unit is adding three U.S.-listed index-based ETFs that are similar to the company’s actively managed covered-call ETFs in the Canadian market, reports Jackie Noblett for Ignites.
The covered-call strategy goes long in an asset and writes, or sells, call options on the same asset to generate income from the asset. The strategy is also known as a “buy-write.”
“In this income-thirsty world, the conversation we’ve had with investors all across the world is they can’t get it from plain bonds and stocks. And the covered-call ETF, that product doesn’t exist in quite the way we are doing it,” Howard Atkinson, global head of ETF sales and marketing for Mirae and president of the Toronto-based Horizons ETFs, said in the article.
The fund provider has ETF products trading in Canada, under Horizons; Australia, under BetaShares; Hong Kong and South Korea.
“If you look at the markets we’ve entered into, we’re usually the first or second to the market with a particular strategy. Coming out with a me-too product, that’s just a race to the bottom on management fees, and you have to be really big to compete there,” Atkinson added.
“Their experience in Canada will give them some institutional trust and credibility, but it’s going to be like any other start-up at first,” John Gabriel, an analyst at Morningstar, said.
The U.S. ETF market is known for its concentration of assets and difficulty for start-ups to acquire assets. The three largest U.S. providers, iShares, State Street Global Advisors and Vanguard make up $1 trillion of the $1.2 trillion U.S. ETF market as of the end of July.
Currently, there is a buy-write ETF and exchange traded note available to investors: the PowerShares S&P 500 BuyWrite Portfolio (NYSEArca: PBP) and the iPath CBOE S&P 500 BuyWrite Index ETN (NYSEArca: BWV).
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.