"KLIP does not collect dividends from Chinese companies. The fund runs a 'covered call' or 'buy-write' strategy: it buys shares of the KraneShares CSI China Internet ETF (KWEB) and writes, or sells, corresponding call options on KWEB."
"When KLIP sells a call option, it collects a premium upfront. That premium becomes the distribution paid to shareholders. The trade-off is direct: by selling calls, KLIP caps gains if KWEB rallies sharply."
"Over the trailing 12 months through April 2026, KLIP paid approximately $7.26 per share in total distributions, roughly 27% on the current share price of about $27."
KLIP employs a covered call strategy by purchasing shares of KWEB and selling call options on it. This approach generates income through premiums collected from options, which are distributed to shareholders. However, this strategy limits potential gains if KWEB's price increases significantly. The income generated is influenced by market volatility, with higher volatility leading to larger option premiums. Over the past year, KLIP's distributions have varied, indicating that some payments may include return of capital rather than solely investment income.
Read at 24/7 Wall St.
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