Call options strategy pays dividends in first year

Schroder Income Maximiser, launched in November 2005, celebrates its one year anniversary this week.

The fund, which pays out quarterly distributions, has delivered dividends of 2.01%, 2.56% and 2.08% [as percentage of the creation price at the start of the dividend accrual period] covering the fund’s first three quarters, and with the next quarterly payment due in January 2007 it remains comfortably on track to deliver on its 7% annual yield target.

Schroder Income Maximiser is an actively managed fund targeting a gross yield for investors of 7 per cent through a portfolio of higher yielding UK large cap stocks combined with a covered call option overlay strategy on those stocks to enhance the yield.
The targeted 7 per cent annual yield is achieved from a combination of dividends from the stocks held, circa 3.5 per cent p.a., and from the premium income obtained from selling covered call options on the stocks, circa 2.5 to 4.0 per cent p.a.

Investors in the fund have the potential to benefit from capital growth, as well as income growth.

Richard Lloyd, Manager of Schroder Income Maximiser said: “The fund has delivered solid returns since launch and in addition to the capital growth since inception we are well on track to deliver the 7% p.a target yield to investors. Fund returns have been strong, helped by good stock selection across a range of sectors. BT Group, Cable & Wireless and Legal & General have all boosted the returns from the underlying equity portfolio.”

Robin Stoakley, Managing Director of Schroders’ UK Retail Business said: “Income Maximiser is the ‘next generation’ of income products. We have clearly demonstrated that the proposition is fundamentally sound and an excellent way of giving clients who require it, a high income with the opportunity for some capital growth. It’s a winner!

“I am delighted that Income Maximiser has exceeded its sales targets both in terms of assets managed and numbers of IFA’s using the Fund and I am confident that it will have a tremendous 2007”.