Gateway Launches New Equity Call Premium Fund

Ted

FYI: Following up on the success of the Gateway Fund, which now manages more than $8 billion in investor assets, Natixis Global Asset Management, Gateway’s parent company, has launched the Gateway Equity Call Premium Fund (GCPAX). The new fund, which began trading on September 30, invests in 200-400 stocks (including ADRs and REITs), and earns income by writing call options on stock market indices, such as the S&P 500 Index. This way, the fund generates income for the fund from the sale of call options in return for putting a cap on the upside of its underlying equity portfolio.
Regards,
Ted
http://dailyalts.com/gateway-launches-new-equity-call-premium-fund/

msf

Here's a M* Fund Spy column explaining how a covered call strategy is good for reducing volatility, mediocre for generating additional total return, and potentially poor for generating an income stream.

See in particular Exhibit 2

All this means is that the strategy may work better if you think of it as a means of generating total return (with somewhat reduced volatility), not as generating an income stream alone.

Edit: Here's the MFO thread earlier this year on covered call strategies. (Note that according to the original article Ted cited above, GATEX uses put options also, so it's not quite comparable.)
http://www.mutualfundobserver.com/discuss/discussion/11337/covered-call-strategies-discussions-and-performance

TheShadow

Here is the 9/30/14 prospectus:

http://www.sec.gov/Archives/edgar/data/1406305/000119312514363150/d799559d497.htm