Pioneer’s European Equity Target Income achieves 7.3% income distribution
Pioneer Investments European Equity Target Income fund has achieved a 7.3% income distribution for 2012, exceeding the original target of 6.1%.
The fund paid semi-annual distributions in July and January each year, and distributed 3.1% in July 2012 and 4.2% was on January 2013.
As a result of this success in 2012, the target income for 2013 has been reset at the higher level of 7%, the firm said.
The aim of this fund is to address this need and seeks to provide investors with a steady enhanced income stream. With the expectation that the low yield environment should continue for some time, this fund provides an alternative to traditional asset classes for clients seeking a higher yielding product.
The strategy seeks to offer investors upside potential through exposure to equity market returns, within a lower volatility framework versus regular equity strategies.
“The European equity market has a dividend yield of about 3.9% with the higher dividend portion of the market offering as much 4.5-5%. With the aim of enhancing the income further, we write call options onto some of the names where we don’t see as much capital appreciation upside. This enables for a potential greater overall income stream into the Fund. It’s a way of aiming to create high-yield-like returns by using what are in many cases almost investment grade-quality names. The result of which is an overall strategy that I believe can be more defensive when inflation is on the rise,” said lead portfolio manager Karl Huber.