Following a review of the two enhanced income funds we rate; Schroder Income Maximiser and RWC Enhanced Income, we have decided to change their ratings to Neutral. Enhanced income funds have a yield target as their primary objective. They have the ability to write covered call options to meet this target and as such should be expected to meet this objective, although to do so they may have to sacrifice total return. We concluded that the structure of enhanced income funds precludes us from having sufficient conviction to justify a positive rating. In line with that decision, the rating of the Schroder Income Maximiser fund has been moved from Bronze to
Neutral. The change of rating for Schroder Income Maximiser reflects this broader decision rather than any dissatisfaction with the fund.
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