The companies said the mutual fund will invest in dividend‐paying U.S. equities and use call options with the purpose of reducing portfolio volatility and creating incremental income. Van Hulzen is adviser to the fund, and Witter Partners is the firm’s strategic distribution and marketing partner.
Van Hulzen says it will employ its proprietary risk management process, which targets lower portfolio volatility compared to the S&P 500 Index and other equity indexes. The strategy focuses on adding income by investing in dividend‐paying equities, as well as writing options on both individual stocks and stock indexes.
Call options give other investors the right to purchase securities that are owned by the fund at a higher price in the future; the fund receives income when it gives that right. By selling the right to purchase a stock, the fund forgoes a portion of its uncertain price appreciation with a goal of higher current income. Options are considered "covered" when the fund owns the stock at the time it sells the option. If the fund sells a position, it will buy back the call options.
“We are delighted to joint venture with an innovative investment adviser who has managed a covered call strategy in separate accounts for years,” said Raymond Godfrey, Managing Partner and Chairman of Witter Partners. “The Iron Horse Fund seems especially timely and suitable in the current market environment. We believe this new fund will have strong appeal for conservative investors seeking a disciplined strategy for capital appreciation and lower volatility.”