Advisers and their clients gain access to the first non-cash retail fund managed directly by Russell’s portfolio managers without underlying managers. The fund aims to provide total returns with lower volatility than U.S. equity markets, seeking gains from call options and equities and income from stock dividends. The fund is managed by a team of four Russell portfolio managers.
The Russell Strategic Call Overwriting Fund invests principally in equity securities economically tied to the U.S. market, using a multi-factor quantitative model to select primarily common stocks of large and medium capitalization companies. The fund also writes index call options, typically on broad-based securities market indexes. The combination of buying common stocks and selling call options is known as “call overwriting.” Writing index call options is designed to reduce the fund’s volatility relative to U.S. equity securities and provide the fund with gains from premiums received.
“In our conversations with advisers, we have consistently heard that they are looking to provide clients with a call overwriting strategy to support long-term wealth creation while managing overall portfolio volatility,” said Phill Rogerson, managing director of consulting and product development for Russell’s U.S. adviser-sold business. “Interest has only increased in the current volatile market environment, and we are pleased to be able to activate Russell’s proprietary research in a mutual fund format that provides advisers and their clients with a key tool to employ this investment approach.”
Many advisers are shifting away from a classic long equities growth strategy in the current market environment of uncertainty and limited growth, according to Rogerson. “This fund is in response to those wealth managers who ask us for strategies that can provide investors with attractive risk-adjusted returns and a potential reduction of losses during market downturns,” he said.
More information is available at Russell Strategic Call Overwriting Fund.