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In Search Of Income: Municipal Bond CEFs (Part II)
- Municipal bond funds currently offer high-tax-bracket investors with very attractive yields that can exceed 10% on a taxable-equivalent basis.
- Potential muni fund investors should consider, among other factors, yield, duration, and expense ratios when selecting from the more than 150 muni CEF choices.
- We recommend VCV and MCA to California-based investors, and MYI and VGM to non-Californians as well balanced choices for tax-free income.
In Search Of Income: Municipal Bond CEFs (Part I)
- Municipal bond funds currently offer exceptional income generation - especially for investors in high tax states like California, New York, and New Jersey.
- Muni bond funds typically carry high sensitivity to interest rates (high average duration) but relatively low default risk.
- Wide average discounts in the muni CEF sector create an attractive entry point for investors seeking tax free income.
In Search Of Income: Covered Call CEFs (Part II - Specific Funds)
- There are 20+ covered call CEFs that Convergence Investments considers potentially investable.
- Funds can be measured and should be evaluated based on income generation, NAV performance, valuation, and a variety of other factors.
- We currently find BDJ, ETJ, and NFJ to be well balanced, attractive funds worthy of investor consideration.
In Search Of Income: Covered Call CEFs (Part I - Sector Analysis)
- Covered call closed-end funds are popular among CEF investors for their ability to generate significant and relatively consistent income with reduced equity market risk.
- However, the sector has lagged other equity CEF types in the past year and is currently out of favor.
- Discounts widened significantly in December to about 8% (in aggregate), making this an attractive time to establish a position in covered call CEFs.
In Search Of Income: High-Yield Bond CEFs (Part II)
- High yield bond closed-end funds have experienced tremendous recent price volatility, creating a potentially attractive entry point for income seeking investors.
- The dozens of funds classified as "high yield bond funds" differ greatly in returns generated and risk factors they contain.
- We highlight DSU, CIK, and HYT as three high-yield funds with well balanced risk and reward profiles.
In Search Of Income: High-Yield Bond CEFs (Part I)
- High-yield bond closed-end funds have experienced a significant sell-off in the first half of December as the markets digest concerns about the falling cost of oil.
- This fund sector offers some of the highest income potential of any fixed-income CEFs for investors willing to bear the credit risk and beta risk inherent in them.
- Current depressed fund values - and relatively wide discounts to fund values - make this an attractive entry point for risk-tolerant investors with a long-term investment horizon.
In Search Of Income: Preferred CEFs (Part II)
- Closed-end funds should be evaluated along multiple dimensions, including distribution yield, NAV performance, valuation, and risk factors.
- Depending on individual investor priorities, a variety of preferred CEFs may be particularly attractive to investors.
- Two funds, JH Premium Dividend Fund and Nuveen Preferred & Income Term, score highly along all dimensions and are particularly appealing investment candidates.
In Search Of Income: Preferred CEFs (Part I)
- Preferred closed-end funds offer several advantages over direct investments in preferred stocks as well as over other income-producing fund types.
- Closed-end funds are best evaluated along multiple dimensions, including distribution yield, NAV performance, valuation, and risk.
- The preferred CEF sector currently offers a very attractive source of income for investors willing to accept some level of market beta.
Ready For The Holiday Shopping Season - In Closed-End Funds?
Nov. 13, 2014 • 15 Comments
- Tax-loss selling appears to be a major force in the closed-end fund marketplace.
- However, selling pressure has historically been strongest in early-to-mid November.
- Long-side investors should begin readying their shopping lists of fund bargains that have been excessively battered in the tax-loss season sell-off.
Look Out Below! PIMCO Closed End Funds Suffer From Bill Gross Departure
- Nearly all of PIMCO's 19 closed end bond funds took a beating today in the wake of Bill Gross' departure.
- Despite today's sell-off, these CEFs remain at lofty premium pricing levels, far out of line with peer funds.
- PIMCO CEF longs should strongly consider their reasons for holding any PIMCO funds.
7 MLP Closed End Funds On Clearance Sale
- Closed end funds focusing on the MLP sub-sector are currently trading at extreme discounts to net asset value and represent a very attractive buying opportunity.
- The recent declines in price have coincided with announcement of the Kinder Morgan reorganization, which has been generally seen as a positive factor for the MLP sector.
- Particularly attractive opportunities exist within seven MLP closed end funds.
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