Closed end funds (CEF) are one of my most lucrative investments. CEF's are off-the-beaten path and offer a wellspring of profitable ideas. They are a personal core dividend income component of maintaining a successful monthly dividend cash flow. I'll expand upon seven CEF's which I own and are own my investment radar.
[Click all images to enlarge]
Eaton Vance Tax-Managed Global offers a 14.4% dividend yield. The fund is trading at a 15.4% discount to net asset value (NAV). This is one key aspect to investing in a CEF: the investor can buy dollar bills for a fraction. This is because once an CEF has its IPO, the CEF shares are not marketed by a brokerage firm.
The fund does not have a managed payout policy. Eaton Vance, a high-quality CEF manager, oversees operations. The expense ration is a very reasonable 1.06%.
The recent SEC N-Q, reporting Eaton Vance Tax-Managed Global Diversified Equity Income Fund's positions as of July 31st, show the covered call strategy.
Eaton Vance Tax-Managed Global focuses upon selling covered calls against the major indices versus individual stocks. Here is a view of the Eaton Vance Tax-Managed Global covered call positions (page 5):
The investor can note the first line has the following option attributes:
- The fund was short 46,000-option contracts of "Dow Jones Euro Stoxx 50 Index".
- The short position expired August 19th, 2011.
- The strike price was 2,750.
- The premiums received was $24,999,499.
The Gabelli Global Gold, Natural Resources & Income Trust yield is a compelling 11.95%. This CEF owns gold, and natural resource stocks (eg coal, energy, timber). Gabelli Global Gold's strategy is to sell covered calls against the positions.
An 11.95% dividend yield as the 30-year Treasury Bond yields sub 3% rates. I believe gold and natural resource stocks will appreciate over time. The human global populations are expanding and gold and natural resources have limited life spans.
Gabelli is a prominent and well-established money manager. The fund has about $923-million in assets. The CEF uses a 9.61% effective leverage rate to enhance shareholder returns. The fund does have a managed distribution of 14-cents per month. The fund's most recent SEC N-Q notes the individual company covered call positions.
Eaton Vance Tax Advantaged Global Dividend Income Fund is the typical covered call fund. The funds attempts to achieve a high total return via current income and capital appreciation. Eaton Vance Tax Advantaged Global Dividend invests in dividend paying common and preferred equities.
Eaton Vance Tax Advantaged Global Dividend currently offers a 10% distribution yield via a 10.25-cent monthly dividend per share. I prefer shares that pay monthly distributions, as this is a personal bias. My bills flow in monthly and I pay my bills accordingly.
Eaton Vance Tax Advantaged Global Dividend sustains its high yield via a 28.96% yield leverage. The expense ratio of 1.51% includes a 40-basis point for interest expense. I am comfortable with both of these percentages. The fund has approximately $978-million assets under management. The fund is currently trading at an attractive 4.13% discount to NAV. I am seeking at add to my position at a 15% discount to NAV.
Cohen & Steers Infrastructure Fund invests in infrastructure equities and bonds. The fund has about 19% in bonds. Infrastructure are often considered recession resistant as the asset class focuses upon necessary projects needed by its respective communities.
The fund trades at an 8% discount to NAV with $1.4-billion assets under management. The quarterly distributions are 36-cents per share. this equates to a 9.5% dividend yield. The leverage is 37%, which is comparatively high for a closed end fund. Cohen & Steers are prominent players in the closed end fund space.
Calamos Strategic Total Return Fund invests in a wide variety of asset classes. The fund trades at a double digit premium and consistently pays their monthly dividend.
Calamos Strategic Total Return Fund trades at a 13.6% discount to NAV. The fund pays a monthly 5.25-cent dividend for an annual 8% yield.
Aberdeen Asia-Pacific Income Fund invests in Australian equities and bonds. The fund also invests in countries in near proximity to Austria, including: South Korea, China, Hong Kong, and Philippines. The fund yields 6.47% and trades at a 6.35% discount to NAV.
The fund trades has assets under management of $1.8-billion. The monthly distributions are 3.5-cents per share. The leverage is 25%, which is comparatively high for a closed end fund.
AllianceBernstein Income Fund owns a world wide area of Government bond positions, non-Government income positions, and a diverse currency hedge portfolio. The holdings can be viewed at the SEC NQ .
AllianceBernstein Income Fund has a total asset base of $2-billion. The fund does have a high leverage rate of 32.34%. AllianceBernstein Income Fund has a 71-basis point annual expense ratio. The fund yields a 5.5% dividend yield via a 4-cent per monthly dividend. The 10.88% discount to NAV makes the CEF a compelling valuation.