Gateway Equity Call Premium Fund Adds Expense Cut to Solid Track Record
- Investors will benefit from a 28% reduction in the fund’s expense cap, from 95 to 68 basis points for the Y (Institutional) share class (GCPYX)1
- The Fund’s low volatility equity strategy uses an index options-based approach with the goal of reducing the volatility of long-only equity exposure while enhancing risk-adjusted return
- The Fund is managed by Gateway Investment Advisers, LLC, which has focused on managing equity market risk with option strategies since 1977
BOSTON–(BUSINESS WIRE)–Natixis Investment Managers (Natixis) and Gateway Investment Advisers LLC (Gateway) announced that the Gateway Equity Call Premium Fund (GCPYX), a low-volatility equity mutual fund, is now available to investors at a reduced fee. The new expense cap is intended to benefit investors seeking a risk-aware approach to equities in the current environment. The fund is managed by Gateway, an affiliate of Natixis Investment Managers, which takes an active, quantitative investment approach using index options2 to build a risk management framework around an equity portfolio designed to provide market exposure.
Launched on September 30, 2014, the Gateway Equity Call Premium Fund (the Fund) seeks to generate a return for investors with lower volatility than the equity market as measured by standard deviation and downside risk.3 The strategy combines a diversified stock portfolio designed to track the performance of the S&P 500® Index with an actively managed portfolio of written S&P 500® Index call options to maintain a consistent level of market exposure and relative risk profile while aiming to generate attractive cash flow. Writing index option contracts can provide risk reduction from exposure to the implied volatility risk premium, defined as the frequent overpricing of the volatility component of index option contracts relative to the realized (actual) volatility of the equity market.4
“A wider-than-average spread between implied and realized volatility has persisted since last September, providing a cash flow tailwind to our index option-selling strategies as options buyers remain anxious enough to overpay for their positions,” said Paul Stewart, CEO at Gateway. “With the stock market at record highs and valuations stretched, investors may benefit from a risk-managed, low-volatility equity strategy. This strategy takes advantage of elevated market volatility and also seeks higher long-term return potential than bonds in the current environment.”
The Gateway Equity Call Premium Fund is co-managed by Mike Buckius, CFA®, Daniel Ashcraft, CFA®, Kenneth Toth CFA®, and Mitchell Trotta, CFA®.5 The Fund may be used as a component of an equity allocation or an alternatives program seeking equity market participation with reduced sensitivity to market swings. The Fund is managed to maintain low correlation with fixed-income market returns and is designed to have no significant sensitivity to changes in interest rates. The Fund uses the same investment strategy under all market conditions. The Fund’s management team has an average tenure of 19 years with Gateway. For more about the Gateway Equity Call Premium Fund and the risk factors involved, please find information here.
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| 1 Not all share classes are available to all investors. |
| 2 Index options (European-style expiration, cash settled and exchange-traded): an option contract on an index (e.g., S&P 500) in which the buyer (owner) pays a cash premium up front to the seller (writer) of the option. If at expiration, the option contract is in-the-money, the seller pays the owner cash in the amount of the difference between the option strike price and the current value of the index; otherwise, the option expires worthless for the buyer and the seller keeps the full premium received up front. The writer of an option is paid a cash premium for taking on the risk associated with the option obligation to pay if the option expires in-the-money. Listed index options contracts can be closed or traded prior to expiration date, but not exercised. |
| 3 Volatility management techniques may result in periods of loss and under performance, may limit the ability to participate in rising markets and may increase transaction costs. |
| 4 Implied volatility is the expected volatility reflected by the prices of option contracts. Broad-based U.S. equity market implied volatility is measured by the Cboe Volatility Index, commonly known as the VIX. The VIX Index is a calculation designed to produce a measure of constant, 30-day expected volatility of the U.S. stock market, derived from real-time, mid-quote prices of S&P 500® Index call and put options. Broad-based U.S. equity market realized volatility is measured by the annualized standard deviation of daily returns of the S&P 500® Index |
| 5CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute. |
Returns, risk and rankings
| Average annualized total | YTD | 1-Year | 3-Year | 5-Year | Inception to |
| Gateway Equity Call Premium Fund Y Total Return (%)† | 11.41 | 28.52 | 10.09 | 9.58 | 8.00 |
| Sharpe Ratio1 | 3.08 | 3.19 | 0.74 | 0.87 | 0.79 |
| Standard Deviation (%)2 | 10.51 | 11.57 | 12.33 | 9.77 | 9.13 |
| Morningstar Percentile | 12 | 3 | 9 | 7 | — |
| Morningstar Ranking | 20/172 | 8/152 | 12/81 | 7/57 | — |
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| CBOE S&P 500 BuyWrite Index (BXM)4 Total Return (%)† | 11.10 | 27.28 | 5.36 | 7.05 | 6.23 |
| Sharpe Ratio1 | 3.02 | 3.17 | 0.34 | 0.55 | 0.54 |
| Standard Deviation (%)2 | 10.44 | 11.20 | 14.88 | 11.64 | 10.69 |
Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results. Total return and value will vary, and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. For most recent month-end performance, visit im.natixis.com. Performance for other share classes will be greater or less than shown based on differences in fees and sales charges. You may not invest directly in an index. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any.
Gross expense ratio 1.17% (Class Y share). Net expense ratio 0.95% (Class Y share). As of the most recent prospectus, the investment advisor has contractually agreed to waive fees and/or reimburse expenses (with certain exceptions) once the expense cap of the fund has been exceeded. This arrangement is set to expire on 4/30/22. When an expense cap has not been exceeded, the gross and net expense ratios and/or yields may be the same.
| 1 Sharpe Ratio is the average return earned in excess of the risk-free rate and is calculated on a daily basis for periods less than one year and on a monthly basis for all periods greater than one year as of the most recent month-end. |
| 2 Standard deviation measures the risk of a portfolio or market and is calculated on a daily basis for periods less than one year and on a monthly basis for all periods greater than one year as of the most recent month-end. |
| 3 Morningstar rankings for the Gateway Equity Call Premium Fund in the Options Trading category is as of June 30, 2021. The fund’s total return percentile rank for the specified time period is relative to all funds that have the same Morningstar category. The highest (or most favorable) percentile rank is 1, and the lowest (or least favorable) percentile rank is 100. Rankings are subject to change monthly. Morningstar rankings do not include the effect of sales charges. Past performance is no guarantee of future results. ©2021 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
| 4 The Cboe S&P 500 BuyWrite Index (BXMSM) is a benchmark index designed to track the performance of a hypothetical buy-write strategy on the S&P 500® Index. The BXM is a passive total return index based on (1) buying an S&P 500 stock index portfolio, and (2) “writing” (or selling) the near-term S&P 500® Index (SPXSM) “covered” call option, generally on the third Friday of each month. The SPX call written will have about one month remaining to expiration, with an exercise price just above the prevailing index level (i.e., slightly out of the money). The SPX call is held until expiration and cash settled, at which time a new one-month, near-the-money call is written. |
Fund Risks:
Equity securities are volatile and can decline significantly in response to broad market and economic conditions. Options may be used for hedging purposes, but also entail risks related to liquidity, market conditions and credit that may increase volatility. The value of the fund’s positions in options may fluctuate in response to changes in the value of the underlying asset. Selling call options may limit returns in a rising market.
Before investing, consider the fund’s investment objectives, risks, charges, and expenses. Visit im.natixis.com or call 800-862-4863 for a prospectus or a summary prospectus or a summary prospectus containing this and other information. Read it carefully.
About Gateway Investment Advisers
Based in Cincinnati, Ohio, Gateway Investment Advisers, LLC (Gateway) specializes in low volatility equity strategies for risk-conscious investors. Since 1977, the firm has maintained consistent focus on reducing the risk of equity investing with option strategies. Gateway’s core low-volatility strategy seeks to capture the majority of the returns associated with equity market investments, while exposing investors to less risk than other equity investments. The firm, which has been an affiliate of Natixis Investment Managers since 2008, had over $10 billion in assets under management as of March 31, 2021.
About Natixis Investment Managers
Natixis Investment Managers serves financial professionals with more insightful ways to construct portfolios. Powered by the expertise of more than 20 specialized investment managers globally, we apply Active Thinking® to deliver proactive solutions that help clients pursue better outcomes in all markets. Natixis Investment Managers ranks among the world’s largest asset management firms1 with nearly $1.4 trillion assets under management2 (€1,135.5 billion).
Headquartered in Paris and Boston, Natixis Investment Managers is a subsidiary of Natixis. Listed on the Paris Stock Exchange, Natixis is a subsidiary of BPCE, the second-largest banking group in France. Natixis Investment Managers’ affiliated investment management firms include AEW; Alliance Entreprendre; AlphaSimplex Group; DNCA Investments;3 Dorval Asset Management; Flexstone Partners; Gateway Investment Advisers; H2O Asset Management; Harris Associates; Investors Mutual Limited; Loomis, Sayles & Company; Mirova; MV Credit; Naxicap Partners; Ossiam; Ostrum Asset Management; Seeyond; Seventure Partners; Thematics Asset Management; Vauban Infrastructure Partners; Vaughan Nelson Investment Management; Vega Investment Managers;4 and WCM Investment Management. Additionally, investment solutions are offered through Natixis Investment Managers Solutions, and Natixis Advisors offers other investment services through its AIA and MPA division. Not all offerings available in all jurisdictions. For additional information, please visit Natixis Investment Managers’ website at im.natixis.com | LinkedIn: linkedin.com/company/natixis-investment-managers.
Natixis Investment Managers’ distribution and service groups include Natixis Distribution, L.P., a limited purpose broker-dealer and the distributor of various US registered investment companies for which advisory services are provided by affiliated firms of Natixis Investment Managers, Natixis Investment Managers S.A. (Luxembourg), Natixis Investment Managers International (France), and their affiliated distribution and service entities in Europe and Asia.
Natixis Distribution, L.P. is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.
• Natixis Distribution, L.P. is located at 888 Boylston Street, Suite 800, Boston, MA 02199-8197 • 800-225-5478 • im.natixis.com • Member FINRA | SIPC
| 1 Cerulli Quantitative Update: Global Markets 2020 ranked Natixis Investment Managers as the 17th largest asset manager in the world based on assets under management as of December 31, 2019. |
| 2 Assets under management (“AUM”) as of March 31, 2021 is $1,354.8 billion. AUM, as reported, may include notional assets, assets serviced, gross assets, assets of minority-owned affiliated entities and other types of non-regulatory AUM managed or serviced by firms affiliated with Natixis Investment Managers. |
| 3 A brand of DNCA Finance. |
| 4 A wholly-owned subsidiary of Natixis Wealth Management. |
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