Schroder Income Defensive is an innovative, equity-based fund that is designed to deliver an enhanced yield of around 5-6% per year, while providing a certain level of downside protection. It combines a traditional equity income portfolio with derivatives to create a fund that is highly attractive in volatile market environments and for investors who may be more risk averse. Launched in March 2008, the fund has a very limited track record so far.Over the long term, the fund has the potential to deliver some capital growth along with the higher yield and a measure of defensiveness. The Manager may selectively sell short dated call options over securities or portfolios of securities held by the fund, or indices, in order to generate additional income by setting target 'strike' prices at which those investments may be sold in the future.In order to provide some protection for the fund from loss of capital, the Manager may selectively buy put options on securities or portfolios of securities which may or may not be held by the fund, or indices at target prices that are pre-set below the current market level.The Manager may also, for the purpose of efficient management, use derivative instruments which replicate or imitate the performance of the call options, the equity securities or the put options, or any combination of the above. In particular, the Manager may employ short positions in forwards or futures on securities, portfolios of securities or indices within a dynamic trading strategy to provide a similar effect to the purchase of put options.The fund may invest in directly held transferable securities, collective investment schemes, derivatives, cash, deposits, warrants and money market instruments.
140.11p
