Assessing Closed-end Call Writing Funds (CEF: MCN)

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 |  About: Madison Covered Call & Equity Strategy Fund (MCN)
by: Roger Nusbaum

Roger Nusbaum submits: There is an article in Barron's about closed end call writing funds [summarized here]. The article was negative. As a group, the funds have not done well but are doing a little better lately. The conclusion that is made in the article about these funds being a bad way to go may turn out to be right or wrong. I have written about these funds a lot in the past and I believe in the concept.

However, at every step along the way I have disclosed that these only make up 5%-10% of the fixed income portion of my client accounts. The means a client with 60% equities and 40% bonds would, at most, have 4% of his total portfolio in one of these.

If the fund I use, Madison Claymore (NYSE:MCN), which luckily for me has done relatively well, should somehow cut in half, I would look dumb which is a lot better than if I had financially damaged someone by owning too much in the hunt for yield.

MCN 1-yr chart: