Schroders is to launch a cautious version of its income maximiser that will target an initial yield of between 5 and 6 per cent.
The Schroder UK income defensive fund will use two put options to defend investors from potential market instability.
The fund will invest in 30 to 50 mid and large-cap stocks with put options protecting on the FTSE 100 and 250 should either index fall.
Schroders income maximiser has been a success since its launch back in 2005 having grown to £251m. The portfolio is more aggressive in that it looks to return some 7 per cent per annum through yield returns and call options.
Where as the strike price on the covered call options on the income maximiser sit at 105 to 115 per cent, the options on the defensive income product will be set at 90 and 95 per cent respectively.
The fund is set to launch on 7 March with minimum investment at £1,000. Charges are set at 5.25 per cent initial and 1.5 per cent annual.