Options have their place in an investor’s overall toolkit. When used judiciously, options can help increase the income generated by a portfolio and provide downside protection to wary investors. Two funds to examine that use options are Van Kampen Equity Premium Income Fund (VEPAX) and Gateway Fund (GATEX). Although the news in recent years has highlighted the risks of certain investment strategies, such as options, the headlines shouldn’t dissuade investors from learning more.
When investors look at purchasing a fund, they often review a fund’s objective and its historical performance. While both are logical to examine, it is also important to know exactly who it is that is managing the fund, since this person is, ultimately, the one to whom an investor is entrusting his or her money.