Having portfolio protection means the fund has outperformed the broader share market over the last five to seven years, Zurich senior investment strategist Patrick Noble told InvestorDaily.
“The fund has probably done better than the broader share market over the last five to seven years, but it hasn’t been because we’ve been picking the best stocks,” Mr Noble said.
“It has been because when the market has bouts of volatility you’ll find that we protect some of that downside.”
What sets the fund apart from its peers is that it uses some of its income to buy insurance for the portfolio, giving it a degree of downside protection, Mr Noble said.
“It’s interesting when you talk about the performance of our fund in a strong market like we’ve had over the last 12 months, as you would expect us to provide a high income as the primary objective, but we probably will lag the broader market relative to peers because we are always spending a little bit of money just in case there are times of market volatility,” he said.
“It is just a timely reminder that sometimes slow and steady will win the race.”
The Zurich Investments Equity Income Fund was formed in 2006 by fund manager Denning Pryce and is managed by portfolio manager Michael Pryce.
Mr Noble believes Mr Pryce’s background in derivatives and risk management is one of the fund’s key strengths.
“He recognises that the options market can provide share investors with additional premiums above those the dividend market provides,” he said.
The Zurich Investments Equity Income Fund was the only fund to be “highly recommended” by Zenith Investment Partners, while 12 funds received a “recommended” status and four funds were “approved” by Zenith.
