Van Kampen Offers an Alternative to Closed-End Covered Call Funds

I visited the Van Kampen website today and noticed that they are offering an open end fund that uses a covered call strategy, the Van Kampen Equity Premium Income Fund. This is the only recently launched open end fund I know of that utilizes a covered call strategy. It will be interesting to see how the performance of this fund compares with that of similar closed-end funds.

For anyone who researches their own investments, the closed-end funds would probably be preferable because they won’t have the big sales charge and the recurring 12b-1 fees of the Van Kampen fund. Plus, once again, closed-end funds have the advantage of a stable asset base on which the calls can be written.

The upside is that if the Van Kampen fund is able to attract substantial assets, we may soon see other fund companies launch their own covered call funds, and the resulting competition could lead to widening discounts for their closed-end counterparts.

Comments

[JeffreyGrossman]

Claymore and Fiduciary Asset Management also have an open-end covered call mutual fund, trading since September 30, 2005. The ticker symbol(s) for the Claymore/Fiduciary Strategic Equity Fund are CFEAX (A Shares) and CFECX (C Shares).