Cullen Capital Management plans to extend its UK presence with the launch of an “enhanced” version of its $592.9m North American High Dividend Value Equity fund.
The asset manager intends to open the Cullen US Enhanced Equity Income fund at the end of the month following demand from investors for a higher-yielding US equity income strategy.
The fund aims to increase the yield of the existing Cullen North American High Dividend Value Equity fund by placing call options on around one-quarter of the portfolio.
Fund manager Jim Cullen, president and founder of Cullen Capital Management, says the company has been writing call options on some holdings on an ad-hoc basis for about 15 years and recently incubated a strategy focusing on this approach after demand from investors.
Cullen says: “If you write options on as much as 25 to 35 per cent of the portfolio you still get a good play on the underlying portfolio but you can generate as much as 3 or 4 per cent extra yield on top of the 4 per cent on the underlying portfolio.
“That gives you a bit more downside protection and also if the markets get a bit more extended, it gives you the opportunity to get out earlier on some of the names that are getting expensive.”
The firm says the new fund is aimed at investors looking for a “halfway house” between bonds and equities as they move back to the stockmarket, as well as those interested in the equity income story.