The asset management unit of Swiss bank UBP is launching a European blus chip dividend fund, with an option writing overlay to reduce the portfolio's beta and volatility.

The fund is a variation on the theme of access to the 'risk asset' of shares, with protective measures for those investors who want a less volatile form of exposure.

Research from the London Business School published yesterday showed the importance of exposure to equities over the very long term (since 1900). Shares made a real return of 5.4%, but on an annual standard deviation of 17.7%.

The real returns easily outpaced bonds (1.7%) and Treasuries (0.9%), but equity volatility was almost double that of bonds (10.4%) of the long term.

UBP Asset Management's Dividend+ strategy will focus on European large caps, and write call options on each of the stocks it holds.

It will be managed by UBP's four-member European equities team, consisting of Cristiano Migliorini, senior quantitative specialist in Geneva, and his colleagues in London.

The stocks will have to show a long track record of regular dividends to qualify for investment. The target yield is 10% per year.

Scott Meech, co-head of UBP Asset Management's European equities team, said the fund was designed with "the uncertain market outlook in mind. Our extensive backtests suggest that the fund has an excellent chance of strongly outperforming in the kind of sideways-moving markets we expect for the foreseeable future."

Richard Wohanka, chief executive of UBP Asset Management, says investors need to change the way they look at stocks.

"The focus has been on stock prices for the past 30 years [but] in the current environment equities are more about income than capital gain."