Desperately seeking income
Options are not always risky derivatives that financial planners should be scared of, according to Zurich senior investment specialist Patrick Nobel.
Speaking at the PortfolioConstruction conference yesterday, Noble said options could be used in a conservative manner to deliver investment income for investors. One such strategy, used for over 30 years, is a ‘buy-write’.
By writing (selling) call options against a portfolio of shares, additional income can be earned over and above dividends generated by the underlying equities. The ‘buy-write’ index can also deliver returns at low levels of risk, Noble said.
The Zurich Investments Equity Income Fund uses a ‘buy-write’ strategy over a portfolio of the top 50 companies listed on the Australian Stock Exchange.
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