Global X Launches S&P 500 Covered Call ETF in Hong Kong for 100% After-Tax Dividend Yield

Global X ETFs has announced the launch of a new ETF product in Hong Kong, the Global X S&P 500 Covered Call ETF (03415), set to be listed on August 29, 2025. This ETF is designed to provide investors with a stable income stream and tax advantages while participating in the growth of the U.S. stock market.

The ETF employs a covered call strategy, which involves investing in the constituent stocks of the S&P 500 Index and selling corresponding call options to generate option premium income. This strategy allows investors to benefit from the potential appreciation of the underlying stocks while also providing a steady stream of income from the option premiums. The covered call strategy is particularly effective in volatile market conditions, as the option premium income can offset losses during market downturns and create excess returns during market fluctuations.

For Hong Kong investors, the ETF offers significant tax advantages compared to similar products listed in the U.S. As non-U.S. tax residents, Hong Kong investors are subject to a 30% withholding tax on cash dividends from U.S. stocks and ETFs. While there are procedures to apply for partial tax refunds, the process is often complex and time-consuming. Additionally, Hong Kong investors do not have to pay capital gains tax on either U.S. or Hong Kong-listed ETFs. Therefore, the after-tax dividend yield of Hong Kong-listed ETFs can reach 100%, while U.S.-listed ETFs retain only 70% of their yield after standard withholding tax.

The covered call strategy involves selling call options on the underlying stocks or index, allowing the option buyer the right to purchase the stock at a predetermined price and date. This strategy generates additional income from the option premiums, which can be used to offset potential losses or enhance returns. However, the strategy may limit the investor's ability to benefit from significant market upswings, as the call options may be exercised, limiting the potential gains from the underlying stocks.

While the covered call strategy involves complex option trading operations, the ETF format allows investors to participate in this strategy at a low cost and with high transparency. This makes it an accessible and efficient tool for investors seeking professional-level risk management. The launch of the Global X S&P 500 Covered Call ETF in Hong Kong provides local investors with an innovative investment tool that offers participation in U.S. stock market growth, regular income, and tax advantages, helping them achieve asset preservation and appreciation in volatile markets.