CII Reflects Even Stronger Fundamentals Than Before the Dividend Cut [View article]
Frankly, I was surprised BOE and BGY didn't get a cut too. Both seemed more deserving than BDJ in my opinion. I can only guess that because the funds are global and/or quite a bit larger than BlackRock's other option-income funds at $1.2 & $1.1 billion, that they didn't want to lower the boom on all of their funds at once. I think there is a very good chance that BOE and BGY lower by the end of the year as well.
CII Reflects Even Stronger Fundamentals Than Before the Dividend Cut [View article]
Thank you. As for your question, it probably depends on where you think the market goes from here. JSN is more defensive and should hold up better in a weak market whereas CII can be more volatile and probably has more upside in a strong market. You might want to buy both but remember, they both just went ex-dividend. For upcoming CEF's going ex-dividend, I like IGD on any pull back. All the ING funds go ex-div on July 1.
6 High-Yield Dividend Stocks for a Portfolio Boost [View article]
PGP does not own equities and does not sell call options like many covered-call income funds do. They are a long option fund. Their strategy is to use income from their leveraged fixed income positions to purchase S&P mini futures. They can also buy puts. But do not confuse PGP with a covered-call fund...they are very different.
CEFs: Look to Nuveen's Option-Income Funds for a Defensive Market [View article]
JTD is a much different fund than JSN, JLA & JPZ. JTD uses leverage for its income strategy and will have more downside exposure in a difficult market, even with about 23% of its portfolio in preferred securities. JTD also has a much higher expense ratio because of its leverage.
CEFs: Look to Nuveen's Option-Income Funds for a Defensive Market [View article]
You need to plug back in the dividends for these funds which average about 10% per year. The graphs don't include distributions. Just go to Yahoo Finance, put in the ticker, link to 'Historical Prices' on left side and then plug in date range and 'Dividends Only'.
Which Option-Income CEFs to Buy Right Now [View article]
The option-income funds that I follow have moderate expense ratios, typically in the 1% range annually. Certainly higher than ETF's but lower than most leveraged and other specialized CEF's which can have total fees in the 2% up to 3% range.
5 Global CEFs Paying Monthly Dividends [View article]
I just don't like the dividend harvest funds like AOD & AGD. 1,000% portfolio turnover to generate oodles of tax-advantaged income while the NAV widdles away is not a good long term plan.
No other equity CEF's that came public over the past 5-years or so at $20 inception value ($19.06 for inception NAV's) have seen their NAV's reduced to $6 & $7 levels.
By the way, don't use ROC as a basis for your investments. It's the most misunderstood red flag when it comes to CEF's.
5 Global CEFs Paying Monthly Dividends [View article]
True. Very dangerous portfolio if the markets go into a more difficult cycle. There's a reason why AGD & AOD have lost over 60% of their NAV since inception.
Which Option-Income CEFs to Buy Right Now [View article]
I'm sorry if you had a bad experience with Eaton Vance but most every option-income fund from every fund family has cut distributions over the past few years whether they had high ROC or not.
If you don't like ROC in your funds then stay away from option-income funds in general. If you think the market continues on its upward trajectory then the leveraged funds will perform better anyway. Eaton Vance happens to have 3 of the best...ETO, ETG & EVT. Pay monthly, large discounts and no ROC.
Which Option-Income CEFs to Buy Right Now [View article]
ETW & ETV are the next rotation for quarterly dividends the 3rd week of June. I also like ETB which usually gets a much higher valuation. All 3 sell 100% option coverage on their portfolios so they're pretty defensive.
Which Option-Income CEFs to Buy Right Now [View article]
I'll tell you the same thing I said last time you wrote in. If there are other CEF's that present better risk/reward values, I'll write about them. If you or Morningstar have other opinions, thats fine, however calling every fund bad because of 'destructive ROC' (Morningstar uses that phrase often and not just for Eaton Vance) is so overly simplistic that it's ridiculous to use as a basis for analysis.
ROC has nothing to do with dividend cuts. Let me say that again...ROC has nothing to do with dividend cuts because it has very little to do with NAV performance. ROC is a manageable percentage...i.e. Eaton Vance could have shown much less ROC in 2010 for their option-income funds if they chose to and they STILL would have cut the dividend levels.
By the way, Morningstar does like one Eaton Vance CEF...ETJ, which is the one fund I don't like while the fund uses 100% put options. It just so happens to be the worst performing Eaton Vance CEF.
Which Option-Income CEFs to Buy Right Now [View article]
Though I agree with much of your premise, liquidation value as an explanation for why these funds trade at discounts is...to me, like using horoscopes to determine compatibility.
These funds just go through discount and premium phases based on planetary alignments it seems sometimes. Which I guess is why horoscopes could also be used for trying to figure out CEF's as well as the opposite sex.
CEFs: When Return of Capital Doesn't Matter [View article]
Joe, I'm not an accountant so anything I say in regards to tax implications is from a non-professional standpoint.
In the case of the fund's option operations in a bull market, most of these fund's are closing their open positions before expiration and re-selling a month or so out at a higher strike. You'll see in annual reports their closed option position losses. If say, the indexes are up more than 1.5% on the month, they'll just close out their positions and re-open a month or so out at a higher strike and keep their unrealized stock position gains. I use 1.5% but it can be more or less dependent on current volatility.
This makes alot of sense since most funds use index options as opposed to individual stock options and the portfolio managers would rather show ROC than letting equity positions get called away. So when you have nothing but losses to show in a bull market, that can be classified as ROC.
Your other questions are a bit more than I can digest. Option premium should be just short term capital gains or losses. As for dividends, 1099's will show the investment income portion/capital gains portion and it's up to the investor/accountant to reduce their cost basis by the ROC amount. May be a bit oversimplified but I like to keep things simple.
Equity Income CEFs: 4-Month NAV Performances [View article]
Here's an example I used in response to a similar question a couple months ago of how these funds can generate ROC:
Fund owns 100,000 share QCOM @ $58.64 = $5,864,000 basis Fund sells 1,000 March $60 calls @ $0.93X100 = $93,000 premium received. (actual contract closing price)
Annualized, fund could generate roughly 19% return on this position if options expired worthless each month and 100% of position is overwritten. Neither of those situations is typical but that is the written option potential.
Down market...QCOM 3rd week of March at $56.00, fund keeps $93,000 premium but sells 35,000 shares for a realized loss of $92,400 (doesn't have to be QCOM) to offset the short term capital gain in the options. Combined with other positions sold, the realized loss contributes to some of the distribution being ROC.
Up market...QCOM 3rd week of March at $61.00, fund buys back option contract at say $1.25 for a $32,000 loss and re-sells options out to April at $62 strike. Unrealized gain in QCOM is $236,000 but the realized option loss contributes to the distribution being mostly ROC.
Note: This is one reason why Eaton Vance has so much ROC in an up market. They are NOT selling their equity positions, i.e. no capital gains. In which case, the distribution has to be termed ROC if its not investment income (dividends, interest).
Which Option-Income CEFs to Buy Right Now [View article]
www.cefconnect.com/Det...
Then go to "Distributions"
CII Reflects Even Stronger Fundamentals Than Before the Dividend Cut [View article]
CII Reflects Even Stronger Fundamentals Than Before the Dividend Cut [View article]
6 High-Yield Dividend Stocks for a Portfolio Boost [View article]
CEFs: Look to Nuveen's Option-Income Funds for a Defensive Market [View article]
CEFs: Look to Nuveen's Option-Income Funds for a Defensive Market [View article]
Which Option-Income CEFs to Buy Right Now [View article]
5 Global CEFs Paying Monthly Dividends [View article]
No other equity CEF's that came public over the past 5-years or so at $20 inception value ($19.06 for inception NAV's) have seen their NAV's reduced to $6 & $7 levels.
By the way, don't use ROC as a basis for your investments. It's the most misunderstood red flag when it comes to CEF's.
5 Global CEFs Paying Monthly Dividends [View article]
Which Option-Income CEFs to Buy Right Now [View article]
If you don't like ROC in your funds then stay away from option-income funds in general. If you think the market continues on its upward trajectory then the leveraged funds will perform better anyway. Eaton Vance happens to have 3 of the best...ETO, ETG & EVT. Pay monthly, large discounts and no ROC.
Which Option-Income CEFs to Buy Right Now [View article]
Which Option-Income CEFs to Buy Right Now [View article]
ROC has nothing to do with dividend cuts. Let me say that again...ROC has nothing to do with dividend cuts because it has very little to do with NAV performance. ROC is a manageable percentage...i.e. Eaton Vance could have shown much less ROC in 2010 for their option-income funds if they chose to and they STILL would have cut the dividend levels.
By the way, Morningstar does like one Eaton Vance CEF...ETJ, which is the one fund I don't like while the fund uses 100% put options. It just so happens to be the worst performing Eaton Vance CEF.
Which Option-Income CEFs to Buy Right Now [View article]
These funds just go through discount and premium phases based on planetary alignments it seems sometimes. Which I guess is why horoscopes could also be used for trying to figure out CEF's as well as the opposite sex.
CEFs: When Return of Capital Doesn't Matter [View article]
In the case of the fund's option operations in a bull market, most of these fund's are closing their open positions before expiration and re-selling a month or so out at a higher strike. You'll see in annual reports their closed option position losses. If say, the indexes are up more than 1.5% on the month, they'll just close out their positions and re-open a month or so out at a higher strike and keep their unrealized stock position gains. I use 1.5% but it can be more or less dependent on current volatility.
This makes alot of sense since most funds use index options as opposed to individual stock options and the portfolio managers would rather show ROC than letting equity positions get called away. So when you have nothing but losses to show in a bull market, that can be classified as ROC.
Your other questions are a bit more than I can digest. Option premium should be just short term capital gains or losses. As for dividends, 1099's will show the investment income portion/capital gains portion and it's up to the investor/accountant to reduce their cost basis by the ROC amount. May be a bit oversimplified but I like to keep things simple.
Equity Income CEFs: 4-Month NAV Performances [View article]
Fund owns 100,000 share QCOM @ $58.64 = $5,864,000 basis
Fund sells 1,000 March $60 calls @ $0.93X100 = $93,000 premium received. (actual contract closing price)
Annualized, fund could generate roughly 19% return on this position if options expired worthless each month and 100% of position is overwritten. Neither of those situations is typical but that is the written option potential.
Down market...QCOM 3rd week of March at $56.00, fund keeps $93,000 premium but sells 35,000 shares for a realized loss of $92,400 (doesn't have to be QCOM) to offset the short term capital gain in the options. Combined with other positions sold, the realized loss contributes to some of the distribution being ROC.
Up market...QCOM 3rd week of March at $61.00, fund buys back option contract at say $1.25 for a $32,000 loss and re-sells options out to April at $62 strike. Unrealized gain in QCOM is $236,000 but the realized option loss contributes to the distribution being mostly ROC.
Note: This is one reason why Eaton Vance has so much ROC in an up market. They are NOT selling their equity positions, i.e. no capital gains. In which case, the distribution has to be termed ROC if its not investment income (dividends, interest).