Covered Call and Equity Income Fund
A high-quality, high-conviction equity portfolio with an active, single-stock option overlay to capture growth and income.
Investment Strategy
The Fund seeks to provide consistent total return and a high level of income and gains from option premiums. To pursue this objective, the Fund first invests in common stocks of large and midcap companies that we believe are selling at a reasonable price in relation to their long-term growth rate. Then, under normal market conditions, the Fund writes (sells) covered call options on a substantial portion of its portfolio securities. The Fund seeks to produce a high level of current income and current gains generated from writing these options and, to a lesser extent, from dividends.
Portfolio Management
Why Madison Covered Call and Equity Income Fund
- Diversified income stream, historically ranging from 6-9%.
- Active stock investing, utilizing a growth-at-a-reasonable-price (GARP) approach.
- Active options overlay considers our views of the individual stock and overall market.
- Premiums from call options help to partially offset potential market losses, while writing out-of-the-money calls allows for possible upside participation to the strike price of the call options.
Key Highlights (As of Friday December 20, 2024)
Class A | Class C | Class Y | Class I | Class R6 |
|
NAV |
9.16 | 7.99 | 9.65 | 9.66 | 9.87 |
Change($) |
0.09 | 0.07 | 0.09 | 0.09 | 0.09 |
YTD(%) |
2.10% | 1.40% | 2.32% | 2.42% | 2.47% |
Ticker |
MENAX | MENCX | MENYX | MENIX | MENRX |
Inception Date |
10/30/09 | 07/31/12 | 10/30/09 | 02/28/22 | 07/31/12 |
Expense Ratio |
1.30 | 2.05 | 1.05 | 1.00 | 0.92 |
|
Morningstar Overall Among 77 Derivative Income funds |
84.5%
of portfolio covered by call options1
6-9%
historical income distribution yield2
39
holdings1
$256.4M
net assets1
Commentary
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Performance
Average annual returns, %
Portfolio Highlights
Top Ten Fund Holdings (As of 11/30/24)
LAS VEGAS SANDS CORP |
4.48% |
CME GROUP INC |
2.79% |
MATADOR RESOURCES CO |
3.21% |
PAYPAL HOLDINGS INC |
2.78% |
CONOCOPHILLIPS |
2.93% |
BARRICK GOLD CORP |
2.63% |
TRANSOCEAN LTD |
2.92% |
HONEYWELL INTERNATIONAL INC |
2.57% |
MEDTRONIC PLC |
2.91% |
PEPSICO INC |
2.43% |
Documents and Other Information
| Fact sheet | |
| Investment Strategy letter | |
| Summary Prospectus | |
| Complete Holding List | |
| 19A Notice | |
| White Paper: A Guide to Covered Call Strategies | |
| Tax Center |
The Morningstar Rating™ for funds, or “star rating”, is calculated for funds with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics, and may not indicate positive performance. Ratings may vary by share class.
1 Data as of September 30, 2024.
2 Distribution yield equals the Total Distribution amount divided by the average of the beginning and end of year Net Asset Value (NAV). Distribution yield includes net investment income plus both short- and long-term capital gain distributions.
Performance quoted represents past performance. Past performance does not guarantee and is not a reliable indicator of future results. Investment returns and principal values will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than that shown.
Net Asset Value (NAV) is the amount per share you would receive if you sold shares that day. Change refers to the amount (in dollar terms) that the value of the share price changed from the previous day’s close of trading. The Year-to-date (YTD) return is the net change in the value of the fund’s share price (in percentage terms) at NAV from January 1 to the current date shown above. Expense ratios are as of each fund’s most recent prospectus. For more detailed information on performance, including returns for the most recent month-end or quarter-end, view Performance.
Investment returns assume all distributions are reinvested and reflect all applicable fees and expenses. Benchmark index returns assume all distributions are reinvested. Indexes are unmanaged and, therefore, have no fees. Investors cannot invest directly in an index.
An investment in the Fund is subject to risk and there can be no assurance the Fund will achieve its investment objective. The risks associated with an investment in the Fund can increase during times of significant market volatility. The principal risks of investing in the Fund include option risk, tax risk, derivatives risk, concentration risk, equity risk, mid cap risk, and market risk.
As a writer of a covered call option, the Fund foregoes, during the option’s life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the strike price of the call, but has retained the risk of loss should the price of the underlying security decline. In addition to its covered call strategy, the Fund may pursue an option strategy that includes the writing of both put options and call options on certain of the common stocks in the Fund’s portfolio. More detailed information regarding these risks can be found in the Fund’s prospectus.
The S&P 500® Index is a large-cap market index which measures the performance of a representative sample of 500 leading companies in leading industries in the U.S.
The CBOE S&P 500 BuyWrite® IndexSM (BXM) is a benchmark index designed to track the performance of a hypothetical buy-write strategy (i.e. holding a long position in and selling covered call options on that position) on the S&P 500® Index.
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