For those of you unfamiliar with this series of articles, they're basically an approximate five-year profit and loss review of a number of Exchange-Traded Funds (ETFs) and Closed-End Funds (CEFs) that primarily invest in and, hopefully, profit from dividends earned from their investments in preferred securities, equities, or bonds, which they then distribute to shareholders.
This link will provide you the information necessary to fully appreciate and understand the following article, the differences inherent in CEFs and ETFs, and the remaining articles of this series. It will also serve to eliminate lots of reading redundancy for my regular readers.
This report concerns the NexPoint Credit Strategies Fund (NYSE:NHF), hence the following description taken from a QuantumOnline screenshot:
Before I begin I want to point out that you should be aware that 3/11/15 this fund separated into two separate and independent publicly traded companies, which frankly I cannot claim I know whether or not this is a good thing for the investors going forward, and it might be helpful if the more knowledgeable fund investors weigh in on this in the comment section. Consequently, most of the following information concerns a company that no longer exists as the entity it was.
This CEF's fees and costs are above average, management fees total 1.54%, plus unnamed expenses of approximately 0.93% and interest costs of 0.71%. Consequently, its total cost average is 3.18%. Transaction costs include commissions when securities are bought or sold and any applicable taxes if held in a taxable account. The more active the trading account, the higher these fees. From my research thus far, this appears to be standard operating procedure for funds such as this.
The inception date of this fund was 6/29/06, at which time its inception price was $80.00/share and NAV was $75.96. As I write, its share price is $22.15 and its NAV is $24.50, which translates to a discount of -9.63%. However, over this past year, it has traded at an average discount of -13.33%, which tells me that this fund is not highly regarded by fund investors, which might be the result of how it performed during its previous incarnation.
From the following list of its top 10 holdings, it's apparent that this fund primarily invests in corporate equity, preferreds, loans, and debt, virtually all below investment grade quality, and mostly based in American.
The following screenshot is provided by CEFConnect:
Its share price performance over the past year has certainly had its ups and downs, mostly down until the beginning of this year when it appears to have followed the general market upswing as shown in the following screenshot provided by a Yahoo Finance Interactive Chart:
The chart displays NHF's performance over the past year. Beginning on 10/15/15, it traded at $21.72, to its current trading price of $22.14, for a gain of $0.42.
According to the Preferred Channel's DRIP calculator, which also includes an unDRIP'd calculation:
Over the past year, NHF has distributed dividends totaling $2.88, which worked out to an average yearly return of 10.90% unDRIP'd. DRIP'd returns were better, working out to a yearly average yield of 13.04%, which indicates that the DRIP'd shares were acquired advantageously. Their respective ending investment worked out unDRIP'd, $11,090.00, DRIP'd $11,304.00. An impressive investment thus far, but certainly not over the life of this fund, which was an apparent stinker. However, it has performed well since the fund was separated into two separate entities.
Distribution history from inception as shown by CEFConnect:
However, NHF's distribution rate has been constant over the past year.
For those of you interested in adding this fund to your portfolio, at $22.15, you will be buying it at a discount of -9.63%, below its $24.50 NAV. However, you might want to wait because over the past year, this fund has traded at an average discount of -13.33%, but on the other hand it seems like a buy too good to pass up. However, this is a basically new fund with a short history of profiting, most of which was during the time the market was performing well. How it will perform in the future is anybody's guess, and yours to decide.
The following is the list of funds I have and will investigate to give you a clear picture how each has performed over the past five years. Initially, I had decided to judge each over the entire life of the fund, but was dissuaded by a number of followers who advised that the results would be unfairly skewed by the recessionary contraction of 2008-09. Here's that list of funds, which has grown considerably as a result of additions you requested: Be advised this is the last of the series.
iShares U.S. Preferred Stock (NYSEARCA:PFF), PowerShares Preferred Portfolio ETF (NYSEARCA:PGX), Global X SuperIncome Preferred ETF (NYSEARCA:SPFF), PowerShares Financial Preferred Portfolio (NYSEARCA:PGF), VanEck Vectors Preferred Securities ex Financials (NYSEARCA:PFXF), SPDR Wells Fargo Preferred Stock ETF (NYSEARCA:PSK), PowerShares Variable Rate Preferred Portfolio (NYSEARCA:VRP), iShares International Preferred Stock ETF (NYSEARCA:IPFF), John Hancock Preferred Income Fund II (NYSE:HPF), First Trust Preferred Securities and Income ETF (NYSEARCA:FPE), Flaherty&Crumrine/Claymore Total Return Fund (NYSE:FLC), Flaherty&Crumrine/Claymore Preferred Securities Income Fund (NYSE:FFC), Flaherty & Crumrine Dynamic Preferred and Income Fund, Inc. (NYSE:DFP), Flaherty&Crumrine Preferred Income Opportunity Fund (NYSE:PFO), John Hancock Preferred Income Fund III (NYSE:HPS), Nuveen Preferred Income Opportunities Fund (NYSE:JPC), John Hancock Preferred Income Fund (NYSE:HPI), Clough Global Opportunities Fund (NYSEMKT:GLO), First Trust Strategic High Income Fund II (NYSE:FHY), First Trust High Income Long/Short Fund (FSD), Prudential Global Short Duration High Yield Fund (NYSE:GHY), ProShares UltraShort S&P 500 (NYSEARCA:SDS), First Trust Intermediate Duration Preferred & Income Fund (NYSE:FPF), Cohen & Steers Select Preferred and Income Fund, Inc. (NYSE:PSF), Virtus Global Multi-Sector Income Fund (NYSE:VGI), DNP Select Income Fund (NYSE:DNP), John Hancock Premium Dividend Fund (NYSE:PDT), Cohen&Steers Infrastructure Fund (NYSE:UTF), Flaherty&Crumrine Preferred Income Fund (NYSE:PFD), Clough Global Equity Fund (NYSEMKT:GLQ), Clough Global Allocation Fund (NYSEMKT:GLV), Duff&Phelps Global Utility Income Fund (NYSE:DPG), Stone Harbor Emerging Markets Total Income Fund (NYSE:EDI), New America High Income Fund (NYSE:HYB), Invesco Credit Opportunities Fund (NYSE:VTA), Calamos Convertible Opportunities&Income Fund (CHI), Pimco Strategic Income Fund, BlackRock Utility&Infrastructure Trust (NYSE:BUI), Western Asset Mortgage Defined Opportunity Fund (NYSE:DMO), PIMCO Dynamic Credit Income Fund (NYSE:PCI), Boulder Growth & Income Fund (NYSE:BIF), PIMCO Income Strategy Fund (NYSE:PFL), and NexPoint Credit Strategies Fund (NYSE:NHF).
Below is a screenshot taken from my IB platform that I populated to keep you apprised of the order of my reviews, and as a bonus, the funds' prices. This screenshot was taken at pre-open of 9/29/16.
Notice, the 2015 dividends are placed just to the right of the fund symbols. To the right of that are the trade prices as indicated on the above date. Of further interest, at the far right of the screen, are the prices of the 13-week highs and lows of each fund.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This is the last of the series of articles primarily focused on the past five year performance of each ETF and/or CEF reviewed strictly from profit or loss perspective, which is designed as a platform, or a setting of the table, for the reader to add his or her thoughts, knowledge, and information to the conversation.