Schroder Income Maximiser unlikely to need covered call options

Fund manager John Teahan said he is "well on track" to meet the vehicle's target yield of 7pc, following months of high dividend growth from underlying stocks, such as GlaxoSmithKline, AstraZeneca and HSBC. The fund generally uses derivative instruments in addition to dividends as a top-up to meet the yield target. The fund currently yields 5pc and this, coupled with high levels of volatility in the market, has enabled Teahan to keep strike levels high so as to maximise capital growth. "The call option overlay has allowed us to achieve the target yield since launch and has also been a...