Kurv CEO on KEO's ETF-of-ETFs Strategy Targets Income and Diversification

**SPEAKER_1** (0:00)
Howard Chan, founder and CEO of Kurv. Howard, good afternoon. Talk to us about the latest launch of Kurv Equity Option Income ETF, that is KEO. What's it all about? Who's it for?

**Howard Chan** (0:13)
Yeah, investors and advisors have been demanding for a simpler and single ticker way to access Kurv's existing seven single stock enhanced income strategies. So that's how KEO came into existence.
It is an ETF of ETFs that looks to bring broad, diversified exposure of the mega cap names that is throughout our lives, including Amazon, Apple, Google, Microsoft, even SpaceX in one ETF.

**SPEAKER_3** (0:45)
I really like that, an ETF of ETFs. So you have exposure here to Amazon, Apple, Google, Microsoft, Netflix, SpaceX, and Tesla all in one ticker. Why is that diversification, particularly important for an options income strategy?

**Howard Chan** (1:02)
Yeah. So these companies, like I mentioned, is parts of all of our lives.
In a previous segment, we've seen that they obviously have experienced certain volatilities in the market. These type of strategies, what we do is to leverage the volatility of these underlying stock to generate income. So should they trade sideways or fall off, the investors can clip coupons from the volatility of the underlying stock. And if the market goes up, we're able to capture the upside. So they can have best of both worlds in one ETF.

**SPEAKER_1** (1:39)
So we've got the holdings here, percentages on the screen right now. I mean, how do you determine that mix and the weighting, Henry?

**Howard Chan** (1:48)
Yeah. So we look at the benchmark as an equal weight, and we deviate from that equal weight. The portfolio holdings is determined by a few different metrics. With growth stocks, there's tend to be a momentum cycle. So we take a look at that.
And there's also rich, cheap, valuation metrics. A lot of these names, the top names, Netflix and Microsoft have actually sold off quite a bit, and it's actually become much cheaper than we have seen in not just the last year, the last five years. So we waited based upon all of these different factors to come out with the portfolio. And I think the most interesting feature is that because of the way that we manage it, the ETF actually is weekly distributing, meaning that income is distributed every week for investors who want to take the cash flow. And if they don't, they can just reinvest it to get the total return of the ETF.

**SPEAKER_3** (2:39)
And Howard, let's dive into that because if you say potential weekly income, that's obviously a big selling point, and it's going to perk anybody's ears up that are listening. But walk us through where that income actually comes from. And what does an investor need to understand about the tradeoff between generating that income on a weekly basis versus participating in the upside?

**Howard Chan** (2:59)
Yeah, so we generate the income through using options or the volatility of the underlying stock. As we've seen, if the stock sells off, generally volatility increases, and we're able to actually harvest the premium from the options to distribute out as income from the fund.
The individual underlying ETFs actually distributes on different weeks during the month. So when you put it together in a basket, there's always one or two ETFs that is distributing every week, and then we distribute that out of KEO on a weekly basis. So we're not eroding now by over distributing into the fund. We've actually carefully staggered the distribution of underlying ETFs such that we can achieve weekly distribution.

**SPEAKER_1** (3:46)
I want to talk about some of your other products because you also have the technology Titan Select ETF, the KQQQ that's actually celebrating its two-year anniversary. I'm just wondering what you've seen as far as demand for that. You say investors are looking for something a little bit more simplified, which is perhaps what informed the way that you set up this particular one on KEO. But I'm just wondering exactly what kind of growth you've seen that name.

**Howard Chan** (4:13)
Yeah, we are very proud to have reached the second year anniversary of KQQQ. It's one of the top performing option income strategies in the technology sector. And really what we wanted to do is try to solve for a problem that many investors have always had in their portfolio, which is this balance between capital appreciation and income.
Most people who want to have exposure to growth stocks, these are technology stocks again that everybody live with in their lives. They just typically distribute little or no dividends. So if you're trying to construct an income portfolio, you almost have to underweigh the most important part of our economy, the growth sector. So what we want to do is actually provide both the growth and the income. And that's actually the conception of KQQQ. And happy to report that we're able to actually provide price appreciation of the underlying growth stock, as well as pretty consistent monthly distribution from that strategy.