IN FOCUS6-8 min read

The Road Less Traveled: Finding income in equities

We believe there is an often overlooked solution which may offer a compelling alternative to the traditional fixed income sectors: enhancing the income of an equity portfolio with a dynamic, yet flexible, call option overwriting strategy.

12-01-2021
Tree-Lined-Road
Read full reportv2-schroders-the-road-less traveled-finding-income-in-equities
0 pages394 KB

Authors

Max Guimond, CFA
Head of North American Solutions

Historically, most institutions who have considered overwriting strategies have favored approaches that sell broad-based equity index options (e.g. S&P 500 Index options) as an overlay to their underlying equity portfolio. We believe the recent uptick in retail activity in the single-stock options market, coupled with the higher idiosyncratic volatility and option premiums of individual stocks, are particularly supportive of a more dynamic and flexible approach that can identify relative-value opportunities across individual companies instead. We refer to these single-stock option overwriting approaches as “Enhanced Equity Income” strategies.

Read full reportv2-schroders-the-road-less traveled-finding-income-in-equities
0 pages394 KB

Subscribe to our Insights

Visit our preference center, where you can choose which Schroders Insights you would like to receive

Important information

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.

Authors

Max Guimond, CFA
Head of North American Solutions

Topics

Please consider a fund's investment objectives, risks, charges and expenses carefully before investing. The Schroder mutual funds (the “Funds”) are distributed by The Hartford Funds, a member of FINRA. To obtain product risk and other information on any Schroders Fund, please click the following link. Read the prospectus carefully before investing. To obtain any further information call your financial advisor or call The Hartford Funds at 1-800-456-7526 for Individual Investors.  The Hartford Funds is not an affiliate of Schroders plc.

Schroder Investment Management North America Inc. (“SIMNA”) is an SEC registered investment adviser, CRD Number 105820, providing asset management products and services to clients in the US and registered as a Portfolio Manager with the securities regulatory authorities in Canada.  Schroder Fund Advisors LLC (“SFA”) is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with FINRA and as an Exempt Market Dealer with the securities regulatory authorities in Canada.  SFA markets certain investment vehicles for which other Schroders entities are investment advisers.

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security/sector/country.

Schroders Capital is the private markets investment division of Schroders plc. Schroders Capital Management (US) Inc. (‘Schroders Capital US’) is registered as an investment adviser with the US Securities and Exchange Commission (SEC).It provides asset management products and services to clients in the United States and Canada.For more information, visit www.schroderscapital.com

SIMNA, SFA and Schroders Capital are wholly owned subsidiaries of Schroders plc.