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The manager seeks to buy equities with a higher than average dividend yield and or which offer the prospect of dividend growth, even during periods of tough economic conditions.
He adopts a safety of income at a reasonable price mentality seeking to avoid companies which don’t have sufficient cash flow to pay future dividends, even if their yield appears high. Where possible investments are made in large, blue chip companies with a proven culture of paying dividends. Invest overseas selectively. Not every stock will provide a certain level of dividend income, instead he will aim for a yield range to give flexibility and the opportunity of capital growth. The covered call strategy is implemented on a discretionary basis. The process will only use exchange based options as a means of reducing counterparty risk. Historically 60-70% of NAV has been covered by options.
Generally options will be written closer to the market price in the case of lower volatility stocks and further away for more volatile stocks.