“It (the option premium) adds a buffer to the downside, but it’s usually over time,” said Samulowitz.
PBP has generated total year-to-date returns of 3.69% year-to-date with over $342 million in assets under management, including an average trading volume of over 112,000.
Additional Income-Producing Benefits
Another benefit derived from PBP is the dividends realized from the securities comprising the index. It adds a second stream of income in addition to the option premiums for PBP–something investors should take note of if they’re only looking at the returns by themselves.
“We re-invest the dividends as far as the equity dividends we take in as well as the option premium we take in,” said Samulowitz. “We’ll re-invest that back into the fund and then the fund has redistributions on a quarterly basis with long-term capital gains being paid out in December.”
2018 Second Half Strategy
The trade wars, primarily between the United States and China, have been roiling the markets the past month, but PBP has managed to eke out a 2.2% return. As far as the second half of 2018 is concerned, PBP could stand to benefit if the hawkishness exhibited by the Federal Reserve continues irrespective of the next tariff move U.S. President Donald Trump’s administration decides to impose.
“The economic data has been really solid so I don’t have a fear of a sharp drop–something beyond 10%,” said Samulowitz. “Thanks to the president, we’re getting good sound bites with the trade war and creating volatility so it’s going to keep volatility elevated and it tends to slow down rallies that we have in the equities market so it allows us to capture more premium than we have in the past.”
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