EQTIX: Shelton Equity Income Fund
A large-cap equity income fund that uses actively managed covered calls on individual stocks to seek consistent cash flow without sacrificing equity market exposure.
Literature and fund information
Shelton Equity Income Fund (EQTIX) received an Overall Morningstar RatingTM of 4 stars among 82 Derivative Income funds, based on risk-adjusted returns, as of 3/31/2026.* Important Information for Morningstar® Rating.
How should investors think about covered calls within an asset allocation. Are they core, part of the income sleeve, or primarily used to help mitigate volatility?
Overview
Shelton Equity Income Fund (EQTIX) is a covered call mutual fund that combines a diversified large-cap equity portfolio with a stock-by-stock call strategy. The fund is designed for investors who want to maintain equity market exposure while pursuing a more income-oriented allocation through active covered call management.
Fund Objective
The Fund’s investment objective is to achieve a high level of income and capital appreciation (when consistent with high income) by investing in income-producing U.S. equity securities.
Where EQTIX can fit
EQTIX can be appropriate for investors who want to remain invested in equities while pursuing a more cash-flow-oriented approach, as well as for advisors building allocations that go beyond dividend-paying stocks alone. The fund is designed to fit as a core or complementary equity income holding for clients seeking:
- A large-cap equity income strategy with active covered call management.
- An additional source of portfolio cash flow alongside fixed income and dividend strategies.
- Equity market exposure without relying solely on dividend-paying stocks.
- A mutual fund structure suited for use in model retirement accounts, and other account types where pooled implementation is practical.
How Shelton Builds The Portfolio
EQTIX invests primarily in a diversified portfolio of large-cap U.S. equities and writes covered calls on individual stocks held in the fund.
We start with the S&P 500, a universe of widely held large-cap US stocks in the industrial, transportation, utility, and financial sectors which are selected by the S&P Index Committee, a team of analysts and economists at Standard & Poor’s.
Using a proprietary screening process, equities are then ranked on a scorecard by an internal cash flow analysis that focuses on volatility, dividend income received, along with capital appreciation.
Using an additional fundamental screen, stocks are filtered by a variety of criteria, including free cash flow yield and price to sales ratios. The highest ranking equities are then selected in each of 11 sectors to closely replicate the sector weightings of the S&P 500 Index. The Portfolio Manager has a preference for large-cap stocks with attractive dividend yields.
Finally, we identify and purchase roughly 40 equities which we believe have the most over-priced call options. We strategically write (sell) those covered calls two to twelve times per year to generate cash flow in addition to the portfolio’s dividend yield.
Why Investors consider an equity income mutual fund
- Cash-flow-oriented approach through a combination of dividends and option premiums.
- Large-cap equity across U.S. sectors.
- Actively managed, covered call implementation.
- Use as a core or complementary equity income allocation.
- Mutual fund structure suited to a range of advisor workflows and account types.
- Available through multiple advisor platforms and supermarkets.
- $1,000 minimum investment.
Management Team
Barry Martin, CFA
Nick Griebenow, CFA
Jason Goldenberg
Jake Gallion
Common Questions
EQTIX is a large-cap equity income mutual fund that uses covered calls on individual stocks as part of an actively managed covered call strategy.
EQTIX seeks cash flow through two sources: income from the underlying equity portfolio and option premiums generated by writing covered calls on individual stock holdings. The fund’s active approach to selling calls at the position level permits the management team to customize option premium generation based on the risk and return characteristics of individual holdings.
Covered calls written on individual stocks can give the portfolio management team more flexibility than a broad, uniform overlay approach because decisions can be made at the position level. Rather than applying a single set of parameters across an entire portfolio, this allows the team to choose the holdings they want to overwrite, along with the appropriate strike price and expiration. For advisors evaluating covered call mutual funds, implementation is one of the key variables that differentiates strategies.
EQTIX aims to serve as a core or complementary equity income allocation for clients who want to remain invested in equities while adding a more cash-flow-oriented approach. It may be considered alongside dividend equity, fixed income, or other equity income fund strategies as part of a broader cash-flow-generating portfolio. The mutual fund structure makes it practical for use in models, IRAs, and advisor-managed accounts.
Contact Us for More Information
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Important Information
Fund information is not intended to represent future portfolio composition. Portfolio holdings are subject to change and should not be considered a recommendation to buy individual securities. The Fund is subject to several risks, any of which could cause the Fund to lose money. These risks, which are described more fully in the prospectus, include stock market risk, economic and political events risks, sector risks, large and medium sized company risks and value investing risks.
*The fund’s Morningstar three-, five-, ten-year ratings respectively, 3 stars, 3 stars, 5 stars among 82, 66, 40 funds.
Investors should consider a fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund. To obtain a prospectus, visit www.sheltoncap.com or call (800) 955-9988. A prospectus should be read carefully before investing.
Options involve risk and are not suitable for everyone. Prior to buying or selling an option, your client must receive a copy of characteristics and risks of standardized options. Copies of this document may be obtained from any exchange on which options are traded or by contacting The Options Clearing Corporation, One North Wacker Dr., Suite 500, Chicago, IL 60606 (1-800-678-4667).
Shelton Funds are distributed by RFS Partners, a member of FINRA and affiliate of Shelton Capital Management.
Effective on May 19, 2021, the fund changed its name from Shelton Core Value Fund to Shelton Equity Income Fund.
INVESTMENTS ARE NOT FDIC INSURED OR BANK GUARANTEED AND MAY LOSE VALUE.
