Kerley sticks to derivatives to raise yield

Henderson Far East Income manager has 7% of trust in options, allowing vehicle to offer higher annual dividend payments

Mike Kerley is continuing to use derivatives on his Henderson Far East Income trust to enhance yield and capital growth. Kerley, who has used call options since the trust re-domiciled in Jersey at the end of 2006, said moving it outside the UK corporation tax regime gives investors higher annual dividend payments. "Calls are best applied when volatility is high, and as a result, we currently have over 7% of the fund in options," he added. "Our use of call options on nine holdings has made more than £2m for the portfolio." The manager has sold call options on companies like Santos, U...