Option Strategies
Strategies for clients’ seeking to manage risk and generate cash flow with options. Potential to profit from trading underlying securities through puts and covered calls.
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 primarily in income-producing U.S. equity securities.
The Approach
- The management team builds a portfolio of carefully selected US stocks and writes (sells) covered calls on those positions to reduce overall volatility while adding potential incremental cash flow.
- Equities are selected in each of the 11 sectors to closely replicate the sector weighting of the S&P 500 Index. The Portfolio Manager has a preference for large cap stocks with attractive dividend yields.
- We identify and purchase approximately 30 equities which we believe have the most over-priced call options. We strategically write (sell) those covered calls two to six times per year to generate cash flow in addition to the portfolio’s dividend yield.
Why Invest in the Shelton Equity Income Fund?
- The Fund has paid dividends since 1997
- The Fund’s Trailing 12-month Yield is 8.27%*
- Since 2018, EQTIX (14.11%) has a lower standard deviation than the S&P 500 (18.06%) and the 30-year US Treasury T-Bill (16.70%) (as of 12/31/23)**
Morningstar Rating TM
EQTIX
Received an Overall Morningstar Rating TM of 5 stars among 79 Derivative Income funds, based on risk-adjusted returns, as of 3/31/2024. Important Information for Morningstar® Rating***
Quarterly Dividend Yield (Trailing 3-Year Period)
Investors cannot directly invest in an index. The Shelton Equity Income Fund writes covered calls against securities held in the the fund. Neither the S&P 500 nor the Bloomberg Barclays US Aggregate Bond Index write covered calls and thus can generate a lower dividend yield relative to EQTIX. There are no assurances that we will be successful in reaching the investment objectives. A covered call strategy limits upside potential for stock appreciation and will therefore underperform in strong markets. A covered call strategy does not protect against downside risk.
Fund Information
Insights and News
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Management Team
Barry Martin, CFA
Nick Griebenow, CFA
Jason Goldenberg
Jake Gallion
Important Information
*Morningstar as of 3/31/2024
**Risk is defined as standard deviation calculated based on total returns using monthly values. This time period was chosen because EQTIX changed to the current strategy in 2018.
***The fund’s Morningstar three-, five-, ten-year ratings respectively, 4 stars, 5 stars, 5 stars among 79, 72, 36 funds.
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).
Any strategies discussed, including examples using actual securities’ price data, are strictly for illustrative and educational purposes only and are not to be construed as an endorsement or recommendation to buy or sell securities. You should review transaction costs, margin requirements and tax considerations with a tax advisor before entering into any option strategies. There are management fees and other charges associated with the Shelton Separately Managed Account programs.
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.
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.
Shelton Funds are distributed by RFS Partners, a member of FINRA and affiliate of Shelton Capital Management.
INVESTMENTS ARE NOT FDIC INSURED OR BANK GUARANTEED AND MAY LOSE VALUE.
