I recently purchased a position in Nuveen Multi-Strategy Income and Growth Fund (JQC). This is a closed-end fund that invests in preferred securities, convertible securities and related instruments, common stocks, and debt instruments, including high yield debt and senior loans. The fund uses leverage currently at 39%. I own JQC in an IRA account because of the high distribution rate.
Here are some things I like about JQC:
- Discount to NAV on Friday= -14.19% which is at the high end of its discount range. Over the last year, the average discount is around -12%. There is a good chance the discount will revert to the mean.
- The fund borrows at very attractive interest rates. Over the last three days, the reported borrowing rates were 3.03%, 3.07%, 2.92%. As a retail investor, if you tried to replicate this fund in a margin account, your borrowing rate would be much higher than 3%.
- Expense ratio of 0.78% is well below average.
- The fund has been paying quarterly distributions of 0.285 or 12.17% annualized. These distributions allow you to recover a good portion of the NAV discount each year.
Full Disclosure: I am long JQC.