Unlocking China's Potential Through Covered Calls

Lead-Lag Live

Are you struggling to find meaningful yield in today's unpredictable markets? You're not alone. The investment landscape is evolving rapidly, pushing savvy investors toward innovative solutions that combine income potential with strategic diversification.
In this enlightening conversation with Jonathan Shelon, Chief Operating Officer at KraneShares, we dive deep into the explosive growth of covered call strategies and why international markets offer a particularly compelling opportunity. Shelon reveals how KLIP, KraneShares' international covered call ETF focused on Chinese internet stocks, generates monthly income in the impressive 3-5% range – substantially higher than what most U.S.-based covered call products offer.
What makes this strategy especially powerful is its diversification benefit. With a correlation of just 0.4 between U.S. and Chinese markets, these assets move on completely different cycles, creating a portfolio cushion when you need it most. As Shelon explains, "When US markets experience stress or drawdowns, it happens at a completely different time than when China experiences market stress."
We explore the compelling valuation case for Chinese equities, with tech companies trading at PE ratios in the mid-teens while maintaining strong growth. This stands in stark contrast to U.S. markets trading near historic highs both in index levels and valuations. Most investors remain significantly underweight China at just 2-3% exposure, despite KraneShares recommending 5-10% allocation.
Whether you're seeking to enhance your income strategy, reduce portfolio volatility, or strategically position for a potential shift in global market leadership, this conversation offers practical insights you won't want to miss. Ready to transform your approach to income and international diversification?
Visit kraneshares.com to learn more about KLIP and other innovative investment solutions designed for today's challenging market environment.

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Chapters

1. Understanding Covered Call Strategies (00:00:00)

2. Rising Demand for Yield Alternatives (00:07:44)

3. The Case for International Investing (00:13:16)

4. K-Web: China's Internet Powerhouses (00:20:39)

5. CLIP: Combining Income and Opportunity (00:29:45)

6. Portfolio Construction and Risk Management (00:37:48)

7. Final Thoughts and Resources (00:46:43)