AllianzGI Diversified Income & Convertible Fund Announces Revisions to the Fund’s Option Strategy
January 23 2018 - 4:05PM
Business Wire
Allianz Global Investors U.S. LLC (“AllianzGI U.S.”), the
investment manager of AllianzGI Diversified Income &
Convertible Fund (the “Fund”) (NYSE:ACV), announced today that the
Fund’s Board of Trustees approved revisions to the Fund’s strategy
of writing (selling) covered call options on stocks held in its
equity portfolio (the “Option Strategy”). The Fund’s objective is
to provide total return through a combination of current income and
capital appreciation, while seeking to provide downside protection
against capital loss. Under normal market conditions, the Fund will
seek to achieve its investment objective by investing in a
combination of convertible securities, debt and other
income-producing instruments and common stocks and other equity
securities.
The Fund’s current Option Strategy is
disclosed as follows:
The Fund expects to normally employ a
strategy of writing (selling) covered call options on the stocks
held in its portfolio (the “Option Strategy”). It is expected that
the Fund will ordinarily write call options on the individual
stocks held in its portfolio, and with respect to up to
approximately 70% of the value of each position. The Fund initially
intends to write covered call options on approximately 50% of the
Fund’s common stocks, but may write covered call options on
approximately 30% to 80% of the Fund’s common stocks from time to
time, depending on market conditions. The Fund’s use of the Option
Strategy may vary from time to time, depending on market conditions
and other factors.
Effective immediately, the Fund’s Option
Strategy and related disclosure is revised in its entirety as
follows:
The Fund expects to normally employ a
strategy of writing (selling) covered call options on the stocks
held in its portfolio (the “Option Strategy”). The Fund will
ordinarily write call options on the individual stocks held in its
portfolio, and with respect to up to approximately 70% of the value
of each position. The Fund will normally write covered call options
on up to 80% of the Fund’s common stocks, with the percentage
varying from time to time, depending on market conditions and other
factors. The Fund’s use of the Option Strategy may vary from time
to time, depending on market conditions and other factors, and the
Fund may determine not to employ the Option Strategy at all during
certain periods.
The change to the Option Strategy is intended to afford the
Fund’s portfolio managers greater flexibility in managing the
strategy by decreasing the lower range of stocks in the Fund’s
portfolio on which it will ordinarily write options from 30% to 0%,
and making clear that the Fund may determine not to employ the
Option Strategy at all during certain periods.
Risks Associated with the Fund’s Option Strategy. The
ability of the Fund to achieve current gains to support Fund
dividends is partially dependent on the successful implementation
of its Option Strategy. There are several risks associated with
transactions in options on securities. For example, there are
significant differences between the securities and options markets
that could result in an imperfect correlation between these
markets, causing a given transaction not to achieve its objective.
A decision as to whether, when and how to use options involves the
exercise of skill and judgment, and even a well-conceived
transaction may be unsuccessful to some degree because of market
behavior or unexpected events. The Fund’s ability to use options
successfully will depend on the ability of AllianzGI U.S. to
predict pertinent market movements, which cannot be assured. As the
writer of a covered call option, the Fund forgoes, during the
option’s life, the opportunity to profit from increases in the
market value of the security covering the call option above the sum
of the premium and the strike price of the call, but has retained
the risk of loss should the price of the underlying security
decline. In other words, as the Fund writes covered calls over more
of its portfolio, the Fund’s ability to benefit from capital
appreciation of its common stock holdings becomes more limited. The
Fund is a closed-end management investment company. There can be no
assurance that the Fund will achieve its stated objectives.
About Allianz Global Investors
Allianz Global Investors is a diversified active investment
manager with a strong parent company and a culture of risk
management. With 25 offices worldwide, we provide global investment
and research capabilities with consultative local delivery. We have
more than $583 billion in AUM for individuals, families and
institutions worldwide and employ over 650 investment
professionals.
At Allianz Global Investors, we follow a two-word philosophy:
Understand. Act. It describes how we look at the world and
how we behave. We aim to stand out as the investment partner our
clients trust by listening closely to understand their challenges,
then acting decisively to provide them with solutions that meet
their needs. (Data as of September 30, 2017)
Disclosures
AllianzGI U.S., an indirect, wholly-owned subsidiary of Allianz
Asset Management of America L.P. serves as the Fund's investment
manager and is a member of Munich-based Allianz Group.
The Fund’s daily New York Stock Exchange closing market prices
and net asset values per share as well as other information,
including portfolio statistics and performance is available at
https://us.allianzgi.com/en-us/products-solutions/closed-end-funds
or by calling the Fund’s shareholder servicing agent at
800-254-5197.
Statements made in this release that look forward in time
involve risks and uncertainties and are forward looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such risks and uncertainties include, without limitation,
the adverse effect from a decline in the securities markets or a
decline in a Fund’s performance, a general downturn in the economy,
competition from other companies, changes in government policy or
regulation, inability to attract or retain key employees, inability
to implement its operating strategy and/or acquisition strategy,
and unforeseen costs and effects related to legal proceedings or
investigations of governmental and self-regulatory
organizations.
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version on businesswire.com: http://www.businesswire.com/news/home/20180123006067/en/
For Allianz Global Investors U.S. LLCFinancial
Advisors, 800-926-4456orShareholders,
800-254-5197orMedia Relations:Kelly Smith,
212-739-3505Kelly.Smith@allianzgi.com
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