Harewood Solutions, a part of BNP Paribas, is shortly to extend its income fund range with the inclusion of its new UK Enhanced Income Fund.
Harewood Solutions, a part of BNP Paribas, is shortly to extend its income fund range with the inclusion of its new UK Enhanced Income Fund.
Generating a quarterly paid gross yield of eight per cent per annum, the fund will also be looking to secure for its investors the potential for capital growth. This will be established through an underlying exposure to the FTSE 100 Index.
The fund will be quoted on the London Stock Exchange and offers investors daily liquidity and a tight bid offer spread around the NAV.
It is intended to achieve the fund’s high income through the combined returns of the equity dividends received on the FTSE 100 Index and BNP Paribas’ Daily Buy-Write strategy which sells short term call options on a daily basis. This strategy allows the fund to capture more efficiently the positive equity market performance whilst simultaneously affording the NAV with some protection in falling markets.
The fund’s exposure to the FTSE 100 Index and to the enhanced buy-write strategy is provided via a contract with BNP Paribas. Shares held by investors benefit from the collateral of AAA G7 government bonds to offset any credit risk in respect of the counterparty, BNP Paribas.
Sisouphan Tran, head of Harewood Solutions, BNP Paribas, says: ‘Amongst its strengths the UK Enhanced Income Fund counts the ability to provide a high and sustainable level of income. In addition, at a time of ongoing market uncertainty, it can play a key defensive role in allowing investors back into obtaining equity exposure.
‘Advisers tell us that the UK Enhanced Income Fund has serious potential, and can become a key component in income provision for more cautious investors. The UK Enhanced Income Fund is an obvious extension to the Harewood product range and with BNP Paribas’ proven track record in this area, we are well-equipped to satisfy the very considerable market demand.’
