Vancouver-based Matrix Funds Management Friday announced the launch of what it says is Canada’s first dedicated covered call corporate class mutual fund.
“Following the successful launch of our Matrix Dow Jones Canada High Dividend 50 Fund (Corporate Class) earlier this week, we are pleased to introduce another first today, the Matrix Covered Call Canadian Banks Plus Fund (Corporate Class),” says David Levi, CEO.
“The conservative options strategy of covered calls has been around a long time and is popular in exchange-traded products through closed-end funds and ETFs. We see a great opportunity to introduce this covered call option strategy to a broader audience in a traditional mutual fund with unique corporate class share benefits that also provides monthly income.”
The new fund is designed to receive dividend and option premium income by investing in dividend paying securities in the Canadian financial sector and employs a dynamic covered call option writing strategy.
“The majority of the portfolio is invested in Canada’s largest commercial banks because they are a key component and driver of our economy. They are respected globally for their relative financial strength and conservative approach,” explains Grahame Lyons, managing partner.
“The call option premiums are expected to increase income generated in the fund, reduce volatility and provide some downside risk protection, which could really benefit investors in these uncertain market conditions,” adds Lyons.
The “Plus” comes from investments made in other Canadian financial sector dividend paying securities with the aim to further increase dividends, option premium income or long term capital appreciation.
Offering the Fund within a corporate class share structure also provides a tax deferral opportunity. Investors with taxable accounts can defer capital gains taxes that would otherwise have been payable on redemption if they switch into other Matrix corporate class funds. This can add significantly to investor returns after tax over time.
Matrix says the fund provides the common attributes and popular benefits of ETFs — low cost, portfolio transparency and tax efficiency — and makes them available to a broader audience.
It adds that the fund combines the power of ETFs with the convenience and broad accessibility of mutual funds in a tax beneficial corporate class structure.
Matrix Funds Management (a division of Growth Works Capital Ltd.) is the manager of the Matrix Funds and a subsidiary of Matrix Asset Management Inc. (TSX:MTA).