U.S.-based investment manager Lucerne Capital Management has announced the launch of the Lucerne European Income Select Fund (LEISF), an actively managed strategy aiming to deliver high monthly income to institutional investors. The Fund combines a diversified portfolio of European blue-chip equities with an active covered call overlay. To execute the options component, Lucerne is partnering with Kim Strandenaes, formerly Head of Derivatives for Danske Bank in Norway.

Scheduled to launch in late 2025, the fund will invest in 30 equal-weighted positions across Europe’s largest and most liquid companies. LEISF intends to systematically sell out-of-the-money call options on 50-80 percent of portfolio holdings via Eurex, London Stock Exchange, and U.S. ADR markets. The approach seeks to generate higher income with lower volatility than major European equity indices, while maintaining a strong focus on capital preservation through active risk management.

“We are launching the European Income Select Fund to address a critical gap in the market for institutional investors seeking consistent, high-quality income without sacrificing capital preservation,” says Pieter Taselaar, Founding Partner and Portfolio Manager of Lucerne Capital Management. “After 25 years of investing in European equities, we believe the current valuation environment, combined with our fundamental research and options management capabilities, creates a compelling opportunity to deliver enhanced income through a disciplined, risk-managed approach.”

“We are launching the European Income Select Fund to address a critical gap in the market for institutional investors seeking consistent, high-quality income without sacrificing capital preservation.”

Pieter Taselaar, Founding Partner and Portfolio Manager of Lucerne Capital Management.

The market backdrop strengthens this case. European equities continue to trade at notably attractive valuations relative to U.S. markets: the Euro STOXX 50 sits at roughly 17 times forward earnings, compared with around 30 times for the S&P 500. European corporates have also historically offered higher dividend yields, reinforcing their appeal for income-oriented portfolios. Lucerne is no stranger to European equities. Alongside its long-established long-only strategies, the firm has also been running the Lucerne Nordic Fund, a dedicated, long-biased hedge fund focused on small- and mid-cap companies across the Nordic region.

“European equities offer institutional investors meaningful diversification from U.S. market concentration risks, particularly in the technology sector,” adds Thijs Hovers, Partner and Portfolio Manager at Lucerne Capital Management. “Our strategy leverages Europe’s deep liquidity and active options markets to create a reliable income stream that complements traditional fixed-income allocations.”

“Our strategy leverages Europe’s deep liquidity and active options markets to create a reliable income stream that complements traditional fixed-income allocations.”

Thijs Hovers, Partner and Portfolio Manager at Lucerne Capital Management.

The fund employs a layered risk-management framework that combines position-level drawdown controls with volatility-based adjustments to option coverage during periods of market stress. The team can also shift from single-stock calls to index options when portfolio holdings begin to move more closely together. This adaptive approach is designed to protect capital while preserving the fund’s ability to generate consistent income across different market environments.