Schroder Investment Management in London is considering rolling out an income-generating U.K. equity fund to other equity markets. Richard Lloyd, head of structured investments, said the manager does not have any specific plans as yet but he noted the fund--which combines classic stock-picking with selling at-the-money calls--could work well with European or even global equities. Dubbed the Income Maximiser, it has raised GBP35 million (USD66 million) since launch in November.
Lloyd said the fund uses over-the-counter single-stock options because it sells options with specific strikes, expiries and start dates. The portfolio references U.K. large and mid-cap stocks, some of which do not have listed options. It sells the options on a quarterly basis and chooses counterparties predominately for their pricing. Lloyd declined to name firms.
"We think this strategy is a good one," said Lloyd. He attributed its steady growth to demand for income-yielding equity investments. "The fund is quite well suited for current market conditions," he explained.
