Astarra Asset Management is about to launch two new funds on the market to meet the income requirements of domestic retail investors.
"These funds are to meet the growing demand in the marketplace for good income-producing products that has happened over the last 12 to 18 months," Astarra Asset Management chief executive Shawn Richard said.
The Sydney-based manager intends to make the Astarra Covered Call Funds available to investors in mid-May, with one fund using Australian equities as the underlying asset and the other international equities.
"When we ask advisers where they are getting income from for their clients they literally have nothing to say, or they might have a redemption strategy to reduce capital, and we believe there definitely are better strategies to achieve this," Richard said.
Both funds will potentially derive income from three streams - from the premium paid by the counterparty on the covered call options, from the dividends issued from the underlying stocks that have been purchased, and from any capital gain experienced by the underlying stocks.
Because income is generated in a different manner the funds also provide an increased level of diversification for investors.
Astarra intends to construct the international shares portfolio from the markets wherever the stocks of the top 100 companies of the world are traded.
In regard to domestic equities, Astarra is looking only at blue-chip stocks and the strategy almost dictates holding on to the top 20 stocks on the ASX, as covered call options available on the local exchange are limited.
Individuals need a minimum investment amount of $5000 to partake in either new fund.
