Exchange-traded fund (ETF) specialist manager BetaShares will soon add to its suite of products with a new listed managed fund that will offer investors access to companies listed on the Nasdaq-100 index.
Apart from exposure to the Nasdaq-100 listed companies, the soon-to-be launched fund is also aiming to generate income in excess of the dividends declared by the organisations included in the index along with a lower level of volatility than that of the index.
The BetaShares Nasdaq-100 Yield Maximiser Fund, set to trade under the Australian Securities Exchange ticker QMAX, is looking to achieve these goals by using a ‘covered call’ or ‘buy-write’ strategy to sell some of the upside share price potential of the portfolio in return for additional upfront income to complement the equity holdings of firms on the index.
The income generated from the call options is expected to be attractive during periods of high volatility as option premiums historically rise under these market conditions.
According to BetaShares chief executive Alex Vynokur, the launch of the fund will meet investor demand for equity strategies that deliver regular income but with lower volatility than conventional equity portfolio allocations.
“To that end, we are proud to expand our leading ‘yield maximiser’ fund range to include the Nasdaq 100 Yield Maximiser Fund. QMAX will offer investors convenient and cost-effective access to an income strategy that can deliver enhanced yield but also has the potential for some capital appreciation,” Vynokur said.
“QMAX’s strategy aims to outperform a strategy of holding the share portfolio alone (that is, without writing call options) in falling, flat and gradually rising markets. However, in a strongly rising market, covered call strategies such as QMAX should be expected to produce lower total returns compared to owning the share portfolio alone.”
When the new offering commences trading, it will join the Australian Top 20 Yield Maximiser Fund, launched in 2012, and the S&P 500 Yield Maximiser Fund, launched in 2014, as part of the BetaShares yield maximiser fund range.
The BetaShares Nasdaq 100 Yield Maximiser Fund will be made available to investors later this month.