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Schroder Mulls Equity Expansion

22 Aug 2006

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 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 rather than listed 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.
22 Aug 2006