The latest ETF offering from BMO GAM, based on a covered calls strategy, generates income from selling call option contracts in addition to the dividend income received from the underlying stocks in the index.
The suite includes three products employing the enhanced income strategy, which will target the UK, Europe and US markets.
The asset manager has over 100 ETF listings globally since establishing its first ETF in Toronto in 2009, with assets totalling £23.5bn as at 31 May 2017.
Like all of its ETFs, the suite of enhanced income products will be overseen by the BMO GAM London team.
The Enhanced Income ETFs will target a yield enhancement of 3% over the chosen equity benchmark, producing an expected total gross yield of 5% for the US vehicle and circa 7% for the UK and European versions.
The ETFs are listed on the London Stock Exchange and each have an ongoing charge figure of 0.30% per year.
According to BMO GAM EMEA head of UK intermediary Rob Thorpe, the new suite will “address many concerns that professional investors have, which is how they can precisely manage their portfolios to a desired level of income, while still maintaining the potential for capital gains”.
“Investors’ search for yield is as strong as ever, as is their focus on ensuring their portfolios are protected on the downside, minimising volatility risk,” he said.
“We expect they will find our new range of high yielding ETFs a very useful tool.”
