Harewood launches UK Enhanced Income fund

BNP Paribas subsidiary Harewood Solutions is launching an income fund which aims to pay 8% annually, but offer considerably less volatility than the FTSE 100.

The UK Enhanced Income fund is an Ucits III version of its flagship closed-ended vehicle. Linked to the FTSE 100, it uses daily covered calls to target an income of 8% per annum, paid quarterly. Sisouphan Tran, head of Harewood Solutions, says the short-maturity daily covered calls means the fund reacts more quickly to market changes than other income funds which sell calls on a monthly or quarterly basis. Harewood has run a similar fund in Europe since October 2006 which has generated alpha of 20% more than the Eurostoxx 50. That fund has a volatility which is one-third less than ...