PURPOSE PREMIUM YIELD FUND (CAD, PYF.B) PYF.B.CA

The Purpose Premium Yield Fund is an actively managed equity-option income fund whose investment mandate focuses on generating high monthly income and long-term capital appreciation by using options strategies applied to a portfolio of equities.

The strategy involves writing cash-covered put options on stocks the fund manager finds fundamentally attractive, selling puts at strike prices typically 5-10% below current market levels to provide a buffer against declines.

It also buys or holds equities directly and writes covered call options on those equity positions to earn both dividends and premiums. No leverage is used, and there is active risk management including screening equities by value, quality, income, momentum, low-risk, volatility, put-option "moneyness," liquidity and event risk.

The asset class is primarily US equities and ETFs, diversified across sectors. The fund's portfolio is built with a "quantamental" approach, targeting a relatively limited number of underlying names (50-60 usually) for direct equity exposure via calls and long equity positions, with most exposure coming via option writing.

Its aim is to produce stable income with lower sensitivity to broad equity and fixed income market moves. The provider is Purpose Investments Inc., with Neuberger Berman Canada as sub-advisor.

The vehicle is an exchange-traded fund domiciled in Canada and launched on January 19, 2016. The fund operates under its own prospectus and is classified as an "Alternative Income" or "options writing" type ETF under the regulatory regime applicable to Canadian fund/ETF vehicles.