Harewood Solutions, part of BNP Paribas Corporate & Investment Banking, is adding to its stable of income funds with the launch of a new IFSL Harewood US Enhanced Income Fund structured as an OEIC.
The objective of the fund is to provide investors with a regular income of 8% per annum* coupled with limited volatility when compared with the S&P 500 Total Return Index.
The fund is based on a strategy that pursues an optimised covered call strategy, which involves selling call options on a daily basis. The premiums generated by the sale of these call options then provide a cushion for the portfolio in the event that markets fall – the greater the risk in the market, the more substantial the cushion. The underlying exposure of the fund is to the S&P 500 TR Index, but the fund itself has lower volatility than that of the Index thanks to the daily sale of call options.
Sisouphan Tran, Head of Harewood Solutions & Privalto UK, BNP Paribas says: “Building on the success of our unique daily covered call funds, we are pleased to make the IFSL Harewood US Enhanced Income strategy available in an open-ended, UCITS-friendly format for UK investors. With continuing low interest rates and rising inflation investors are increasingly looking for ways to diversify their portfolios – not just to improve their level of income but to underpin their capital. Cautious investors looking for high regular income and exposure to the US equity market are likely to find this fund very attractive, especially because generating income from US equities can be particularly challenging for fund managers.”
The fund will be launched on Tuesday 22nd February with minimum investment at GBP1,000. The maximum initial charge is 1% and the annual management charge stands at 0.75%. Liquidity is daily at NAV and there are no exit fees.