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Purpose Investments launches new options income strategy

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Purpose Investments (Purpose) has launched the Purpose Enhanced Premium Yield Fund providing investors with a new way to access an alternative-income strategy. 

Purpose has completed the initial public offering of the fund which is now trading on the Toronto Stock Exchange nder the ticker symbol “PAYF.” The Fund is also available in mutual fund versions.

“We built PAYF for investors familiar with our PYF strategy and in search of greater yield. At its core, PAYF thoughtfully writes put options and is prepared to hold the underlying equity. It allows investors to access the options market without having to develop deep expertise in derivatives. The result is an enhanced yield, with a higher target than PYF, that is uncorrelated with both fixed income and equity markets. We believe there is a natural home for it in most investors’ portfolios. This is another example of us listening to our clients and making their desired strategies widely available,” says Som Seif, CEO of Purpose Investments.

The Fund builds on the success of its companion, Purpose Premium Yield Fund (TSX: PYF), and gives investors another way to access an options income strategy. The strategies both primarily involve selling put options to earn premiums and generate income. Purpose Enhanced Premium Yield Fund aims to provide investors a higher yield by selling puts at 3-5 per cent out of the money, compared with the 8-10 per cent range of Purpose Premium Yield Fund.

Purpose Enhanced Premium Yield Fund will pay a tax-efficient monthly distribution based on the options premiums it generates. The Fund provides value on fees and is accessible with a management fee of 0.75 per cent.

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