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The famous journalism school truism favors the headline "Man Bites Dog" to "Dog Bites Man", on the grounds that the latter is rather more common and therefore mundane, which of course it is. In that sense, "Bill Gross Foresees Wonderful Returns" would be a much more powerful headline, but he never does.

I've posted about a previous investment outlook newsletter of his, and his latest is about as grim. But grim as he may be, his writing is seldom dull and never useless. In this month's installment he shows us how the ability to leverage for extra return is much more limited than it used to be. The lesson I take form this as an income investor, is to be wary of closed end funds that are leveraged to the maximum, taking on a lot of risk for very little extra yield.

I'm still on the lookout for decent-yielding CEFs; when the discount is right - by all means. But the ever-so-marginal and decreasing effect of leverage is one more thing that goes into the equation. And it does not bode well for the CEF industry.

Source: Surprise: Bill Gross Forsees Weak Returns