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Foresters Financial launches the First Investors Premium Income Fund

  • Apr 02, 2018

NEW YORK, NY -- Foresters Financial, an international financial services providers, announced today the launch of the First Investors Premium Income Fund (Class A: FPIKX, Advisor: FPILX and Institutional: FPIMX). The Fund is unique in the open-end mutual fund industry as it sells in-the-money call options against a portfolio of high-quality, high-conviction large-cap equities, essentially trading the potential upside of capital appreciation of a stock for current income while seeking some downside protection. Its investment objective is to generate income for its shareholders.

“The Fund is designed to deliver stable returns in a volatile world. With bond yields at historic lows, the First Investors Premium Income Fund may have a dual purpose: helping to capture income and protect investors’ portfolios at the same time,” according to Wiley Angell, Senior Portfolio Manager, Ziegler Capital Management, LLC, the Fund’s subadviser.  

The First Investors Premium Income Fund aims to achieve its investment goal without some of the risks of holding a bond fund since the Fund’s equity securities do not have significant credit risk or duration risk—and are better insulated from the potential impact of rising interest rates. Also, the Fund can mitigate equity-related risk due to the premiums the portfolio managers expect to receive on in-the-money covered calls. Today, for many investors worried about finding a steady income source, especially amidst uncertain and at times, unstable, financial markets, we feel that the First Investors Premium Income Fund may offer a potential solution. 

 

Disclosures

All investing involves risk, including possible loss of principal. You can lose money by investing in a fund. There is no guarantee that the Fund’s investment objective will be achieved. The principal risks of investing in this Fund are:

American Depositary Receipts Risk.  ADRs may involve many of the same risks as direct investments in foreign securities, including currency exchange fluctuations, less liquidity and more volatility, different governmental regulations, and the potential for political and economic instability.

Call Options Risk.  Writing call options involves risks, such as potential losses if equity markets or an individual equity security do not move as expected and the potential for greater losses than if these techniques had not been used.  By writing covered call options, the Fund will lose money if the exercise price of an option is below the market price of the asset on which the option was written and the premium received by the Fund for writing the option is insufficient to make up for that loss. The Fund will also give up the opportunity to benefit from potential increases in the value of a Fund asset above the option’s exercise price.  Nevertheless, the Fund will continue to bear the risk of declines in the value of the covered assets.  Writing call options may expose the Fund to significant additional costs.  Derivatives may be difficult to sell, unwind or value.

Dividend Risk.  At times, the Fund may not be able to identify attractive dividend-paying stocks.  The income received by the Fund will fluctuate due to the amount of dividends that companies elect to pay.

Exchange-Traded Funds Risk.  The risks of investing in an ETF typically reflect the risks of the types of instruments in which the ETF invests. In addition, because ETFs are investment companies, the Fund will bear its proportionate share of the fees and expenses of an investment in an ETF.  As a result, the Fund’s expenses may be higher and performance may be lower.

High Portfolio Turnover Risk.  High portfolio turnover could increase the Fund’s transaction costs, result in taxable distributions to shareholders and negatively impact performance.

Market Risk.  Stock prices may decline over short or even extended periods due to general economic and market conditions, adverse political or regulatory developments or a change in interest rates.  Adverse market events may lead to increased redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet redemptions.

Mid-Size and Small-Size Company Risk.  The market risk associated with stocks of mid- and small-size companies is generally greater than that associated with stocks of larger, more established companies because stocks of mid- and small-size companies tend to experience sharper price fluctuations.  At times, it may be difficult to sell mid- to small-size company stocks at reasonable prices.

Security Selection Risk.  Securities selected by the portfolio managers may perform differently than the overall market or may not meet expectations.  Declines in certain stocks could detract from the Fund’s returns even when the broad market is flat or increasing and the Fund’s call option writing strategy may make it difficult for the Fund to dispose of underperforming securities.

Tax Risk.  Writing call options may significantly reduce or eliminate the amount of dividends that generally are taxable to non-corporate shareholders at a lower rate.  Covered calls also are subject to federal tax rules that: (1) limit the allowance of certain losses or deductions; (2) convert long-term capital gains into higher taxed short-term capital gains or ordinary income; (3) convert ordinary losses or deductions to capital losses, the deductibility of which are more limited; and/or (4) cause the recognition of income or gains without a corresponding receipt of cash.

First Investors Funds are managed by Foresters Investment Management Company, Inc., underwritten and distributed by Foresters Financial Services, Inc.; each is a wholly owned subsidiary of Foresters Financial Holding Company, Inc.

For more information about First Investors Funds from Foresters Financial Services, Inc., you may obtain a free prospectus by calling 800 423 4026 or visiting foresters.com. You should consider the investment objectives, risks, charges and expenses of the funds carefully before investing. The prospectus contains this and other information about the funds, and should be read carefully before you invest or send money. An investment in these funds is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

Foresters Financial™ and Foresters™ are the trade names and trademarks of The Independent Order of Foresters, a fraternal benefit society, 789 Don Mills Road, Toronto, Canada M3C 1T9 and its subsidiaries, including Foresters Financial Services, Inc. Foresters Financial Services, Inc. is a member of the Securities Investor Protection Corporation (SIPC).

 

About Foresters Financial

Foresters Financial is an international financial services provider with more than three million clients and members in Canada, the United States and the United Kingdom. Foresters provides life insurance, savings, retirement and investment solutions that help families achieve their financial goals and make a lasting difference in their lives and communities. Investment products are offered by Foresters Asset Management Inc.

Foresters Financial has assets of over $13.4 billion, liabilities of $11.3 billion, total funds under management of almost $44 billion and a surplus of $2.1 billion (all figures in Canadian dollars as of December 31, 2016).

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