This 10% Yielder Is Positioned Well In The Short-Term
The Long-Term? Not So Much.
Every week, we’ll profile a high yield investment fund that typically offers an annualized distribution of 6-10% or more. With the S&P 500 yielding less than 2%, many investors find it difficult to achieve the portfolio income necessary to meet their needs and goals. This report is designed to help address those concerns.
As the Fed launches into what’s likely going to be a prolonged rate cutting cycle, covered call funds have been getting some renewed interest. Yields on fixed income products have already been falling in advance of this and investors are starting to see their portfolio paychecks shrink a bit. Covered call strategies that are based on either individual equities or indices aren’t necessarily impacted by changes to the yield curve. As long as volatility exists, they can keep selling those call options and collecting those premiums.
The Voya Global Equity Dividend & Premium Opportunity Fund (IGD) tries to capture those high yields, but takes care to ensure that it’s doing so in a risk-controlled manner. In an environment that has the potential to get quite volatile over the next several months, a little risk management might go a long way.
Fund Background
IGD seeks a high level of income with capital appreciation as a secondary consideration. The fund combines an actively-managed quantitative equity investment strategy with a call writing option strategy. The goal is to create a diversified portfolio with enhanced total return potential and strong downside capture over a full market cycle. It also seeks to maximize total returns and maintain lower
volatility relative to the benchmark over a full market cycle. It sells call options on selected security indexes and/or ETFs, on an amount equal to approximately 50-100% of the total underlying value of the portfolio.
Keep reading with a 7-day free trial
Subscribe to The Lead-Lag Report to keep reading this post and get 7 days of free access to the full post archives.