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Fidelity International to launch Enhanced Income Fund

Fidelity Enhanced Income Fund

Fidelity International has announced that it is launching the Fidelity Enhanced Income Fund, a new fund for investors looking for a high level of regular income, on February 2, 2009.

Managed by Michael Clark, who has 22 years of investment experience, the new fund will aim to deliver a yield of 150-200% of the FTSE All-Share Index yield (net of basic rate tax). The fund’s estimated yield at launch will be 7.1%. This yield is not guaranteed and will fluctuate in line with the yield available from the market over time.

According to the company, the fund will build both on Fidelity’s fundamental investment approach and on Fidelity’s derivatives expertise. The core portfolio will be based on the Fidelity Income Plus fund, an equity income fund run by Mr Clark since July 2008, which invests in 40-60 high yielding stocks. In addition to the base dividends, the fund will generate additional income from writing covered call options. David Jehan, director of derivatives who joined Fidelity in 2007, will work closely with Mr Clark to manage the covered call overlay strategy.

Mr Clark said: The fund’s launch coincides with interest rates being at a historic low, so savers have to look at alternative sources to maintain their income – interest income on bank and building society accounts has fallen dramatically.