Global Covered Call fund

ING Raises $1.7 Billion in IPO for Global Equity Dividend Fund With Option Overlay Strategy

The name of the fund is a mouthful but the ticker is IGD. The fund owns foreign stocks as well as US names that tend to have high dividends and the managers will sell calls against the holdings. I did not see if the fund will sell any index call options or any puts on either the common or an index. The impression I get from the article is covered calls only.

The global aspect interests me. I think this is now the 97th CEF that uses options (97 is a humor attempt). Usually newly issued CEFs have, for lack of a better description, an embedded sales charge that needs to be worked off in the market place. In this case the fund was priced at $20, perhaps $0.50 per share went to the sales force that sold the shares thus making the NAV $19.50 not $20, $0.50 is an example only I do not know what the sales concession is for this one.

I am not positive how long it takes to work this out but if you have any interest in buying this with out a premium to NAV it might make sense to wait a few weeks.

3 Comments

  1. RE: I did not see if the fund will sell any index call options or any puts on either the common or an index. The impression I get from the article is covered calls only.

    I have sent you a PDF document regarding IGD. This does look like an interesting investment.

    Reply
  2. Actually, the IPO NAV will be the “standard” $19.06 for a CEF priced at $20.00 per share. $0.90 (5% load) goes to Citigroup, UBS, and Wachovia for lead underwriting, and $0.04 is eaten by expenses. Never, ever, buy a CEF at IPO. Always wait for the market to sort out the market price against the NAV.

    Check out Form 497 at the sec.gov site for details:
    http://tinyurl.com/3samg

    The fund also intends to purchase out-of-the-money put options along with selling covered calls on individual stocks.

    Reply
  3. lumpy gravy,

    thanks for doing the heavy lifitng on that info!

    Reply

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