Low Volatility U.S. Equity Income Fund
The Fund’s investment objectives are:
- to maximize risk adjusted returns for unitholders; and
- to pay unitholders monthly cash distributions in an amount targeted to be 5.0% per annum on the NAV per unit.
The Fund will invest in a conservative portfolio consisting of large capitalization equity securities selected from the S&P 100 Index with a beta of less than 1.0, combined with selective covered call option writing designed to enhance portfolio income and mitigate downside risk. Beta is a financial term used as a measure of a security’s or a portfolio’s return in relation to the market. A beta of less than 1.0 indicates that the price of a security will generally vary to a lesser extent than the movement of the market and a beta of greater than 1.0 indicates that the price of a security will generally vary to a greater extent than the movement of the market.
To generate additional returns above the dividend income earned on the Fund's investment portfolio, the Fund will, from time to time, write covered call options in respect of a portion of the securities in its portfolio. In addition, the Fund may write cash covered put options and may invest up to 10% of net assets to purchase call options, both in respect of securities in which the Fund is permitted to invest.
The Fund employs Strathbridge’s proprietary SSO option strategy to generate additional returns above the distributions earned on its equity securities.
Click here for a detailed review of the Strathbridge Selective Overwriting (“SSO”) strategy.
The Fund intends to pay monthly cash distributions on the last day of each month in an amount targeted to be 5.0% per annum on the NAV of the Fund.
Click here for a complete distribution history including the historical tax allocation.
The Fund is redeemable annually in August of each year beginning in 2014 at 100% of Net Asset Value less costs, at the option of the unitholder and monthly at a discount to market price.
Click to expand Redemption Details:
Units may be surrendered at any time for redemption, but will be redeemed only on a Redemption Date, being the last business day of any month. Units surrendered for redemption by a Unitholder on or before the first business day of August 2014 or any year thereafter (the “Annual Redemption Date”) will be redeemed on such Annual Redemption Date. Units surrendered for redemption by a Unitholder at least ten business days prior to the last day of any other month (a “Monthly Redemption Date”), will be redeemed on such Monthly Redemption Date. Unitholders will receive payment for the Units on or before the 15th day following any such Redemption Date. If a Unitholder surrenders Units after 5:00 p.m. (EST) on the applicable cut-off date, the Units will be redeemed on the following Redemption Date. Redemption notices must be delivered to the Fund by an investor’s advisory form in sufficient time to meet the deadline.Annual Redemption
Beginning in August 2014, units surrendered for redemption on or before the first business day of August will be redeemed at 100% of net asset value less costs, valued on the last business day of August being the redemption day. Costs may include an amount equal to the aggregate of all brokerage fees, commissions and other costs incurred by the Fund in connection with such payment, including, but not limited to, costs incurred in liquidating securities held in the Fund’s portfolio. Payment will be received on or before the 15th day following the redemption day.Monthly Redemption
For Unitholders whose Units are redeemed on any other Redemption Date, the redemption price per Unit will be equal to the lesser of:
- 95% of the Market Price. For such purposes, “Market Price” means the weighted average trading price of the Units on the principal stock exchange on which the Units are listed for the ten trading days immediately preceding the applicable Redemption Date, and
- 100% of the Closing Market Price of the Units on the applicable Redemption Date, minus an amount equal to the aggregate of all brokerage fees, commissions and other costs incurred by the Fund in connection with such payment, including, but not limited to, costs incurred in liquidating securities held in the Fund’s portfolio. For such purposes, the “Closing Market Price” means the closing price of the Units on the principal stock exchange on which the Units are listed or, if there was no trade on the relevant date, the average of the last bid and the last asking prices of the Units on the principal stock exchange on which the Units are listed.
Any unpaid distribution payable on or before the applicable Redemption Date in respect of Units tendered for redemption on such Redemption Date will also be paid on the applicable Redemption Payment Date.
The Fund will not employ leverage.
There is no fixed termination date as units may be sold daily on the TSX or redeemed annually at net asset value per unit.
CUSIP – 54750V100
ISIN - CA 54750V1004
RRSPs, DPSPs, RRIFs, RESPs and TFSAs
The Fund pays a management fee of 1.0% of net asset value annually to Strathbridge Asset Management for acting as the Manager and the Investment Manager.
A service fee of 0.40% of NAV per unit per annum is paid quarterly to Investment Advisors
The Fund’s Management Expense Ratio (“MER”) is the sum of all operating expenses, including management and service fees but excluding portfolio transaction costs, expressed as percentage of average net asset value.
Strathbridge Asset Management
The Fund may hedge its U.S. dollar exposure back to the Canadian dollar at the descretion of the Manager.