Aiming to provide a high quarterly income, reduced volatility and the potential for capital growth
London – Harewood Solutions, a part of BNP Paribas, is increasing its range of highly successful income products with the launch of the new US Enhanced Income Fund. The Fund will be aiming to generate a gross yield of 8% per annum, paid quarterly, and at the same time provide the potential for capital growth via an underlying exposure to the S&P 500 Index.
The fund will be quoted on the London Stock Exchange and offers investors’ daily liquidity and, like other Harewood Solutions products, a tight bid offer spread around NAV.
High income is generated by equity dividends received on the S&P 500 Index and BNP Paribas’ unique Daily Buy-Write strategy which sells short term call options on a daily basis. This strategy allows the fund to more efficiently capture positive equity market performance whilst simultaneously affording the NAV with some protection in falling markets. BNP Paribas has successfully run a similar strategy for several years on both European and American indices, generating improved risk/return profiles. (Please see chart in Notes to Editors)
The fund’s exposure to the S&P 500 Index TR Index and to the enhanced buy-write strategy is provided via a contract with S&P AA rated BNP Paribas. Shares held by investors benefit from the collateral of AAA G7 government bonds to offset any credit risk in respect of the counterparty, BNP Paribas.
Ryan Rogowski, Head of Harewood Solutions, BNP Paribas commented:
“The US Enhanced Income Fund not only offers a high and sustainable income stream but it can also form part of an investor’s defensive equity strategy, providing for a more seamless transition back into equity markets. BNP Paribas’ has a proven track record and all the right credentials to satisfy this market demand.”
“This is an excellent way of gaining exposure to US equities, an asset class in which it is notoriously difficult to find an actively managed fund that has consistently outperformed. Nonetheless, something rather more than a straight passive fund, with its vulnerability to market swings is called for. The US Enhanced Income Fund fits the bill.”
Notes to editors:
The US Enhanced Income Fund – Key features:
§ Gross dividend yield of 8% per annum paid quarterly, gross, derived from dividend income and the premium from selling short term call options
§ Initial offer price of 101p per share (opening NAV – 100p)
§ Following FSA approval the offer period opened on 15th June 2009. The offer period will close on 9th July, 2009.
§ Preferred shares in a Guernsey domiciled, closed ended, protected cell company
§ Minimum initial investment: 7,000 shares, minimum in secondary market 1 share
§ Application will be made for the shares to be listed on the Channel Island Stock Exchange with a London Stock Exchange quotation and a CISX listing
§ Eligible for ISAs and SIPPs
§ SEDOL:B4409G2 ISIN:GG00B4409G28 TICKER:UEI
§ Market maker – Winterflood Securities
§ Daily liquidity
§ Transparent – annual management charges 0.75%; 0.50% expenses (including but not limited to Administration, Custody and associated costs of securing AAA rated G7 Bond based collateral)
§ Lower volatility than a direct equity investment and no gearing employed
§ The fund is backed by BNP Paribas and is collateralised with G7 AAA Government Bonds to mitigate any counterparty risk.
* The US Enhanced Income Fund uses the same performance engine as the Harewood Covered US Equity fund except that it will pay out part of its returns via an 8% yield.
About Harewood Solutions
Harewood Solutions provides investors with timely access to innovative investment themes, through its fund and product range. Assets under management total in excess of US$1.0bn as at 31 May 2009.
Recent launches from Harewood Solutions:
May BNP Paribas COMAC Fund
February BNP Paribas Enhanced Income Fund
August Launch of Tactical Series
May BNP Paribas Energy Base Metals 3
March BNP Paribas Enhanced Property Recovery Fund
BNP Paribas’ Industry Recognition
BNP Paribas is a recognised global leader in the Structured Products market:
Risk – Structured Products House of the Year 2009
– Equity Derivatives House of the Year 2009
IFR – Equity Derivatives House of the Year 2009
Structured Products – Equity Derivatives House of the Year 2008
– Index Innovation 2008
The Banker – Most Innovative in Equity Derivatives
Euromoney – Global Award for Excellence in Equity Derivatives 2008
About BNP Paribas
BNP Paribas (www.bnpparibas.com) is a European leader in global banking and financial services and is one of the 6 strongest banks in the world according to Standard & Poor’s. The group is present in 85 countries, with more than 171,000 employees, including 131.000 in Europe. The group holds key positions in three major segments: Corporate and Investment Banking, Asset Management & Services and Retail Banking. Present throughout Europe in all of its business lines, the bank’s two domestic markets in retail banking are France and Italy. BNP Paribas also has a significant presence in the United States and strong positions in Asia and the