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Douglas Albo
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Registered Investment Advisor. Prior experience includes 12-years as a Vice-President, Financial Advisor at Smith Barney and Morgan Stanley.
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Capital Income Management, LLC
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  • Step Up To UTF 10 comments
    Jun 12, 2013 3:01 PM | about stocks: UTF

    The Cohen & Steers Infrastructure fund (UTF) is getting hit especially hard today, down -4.0%. I believe this is a good spot to start initiating or adding to positions.

    UTF is very volatile for being such a large fund at $2.6 billion. UTF is a leveraged global utility and infrastructure stock fund with about 18% of its portfolio in corporate bonds and preferred securities. All of these sectors are getting hit hard with a spike up in interest rates but this is a good spot to start accumulating with the fund back to a double digit discount.

    UTF, because of leverage, has been one of the best total return performers of any equity based CEF and its NAV got as high as $23.46 just a few weeks ago on May 21st. That translates to a 164% total return from the market lows in March 2009.

    With the market price now down from $21.71 just a month ago to $19.06, you can pick up UTF at around a -12% discount and a 7.5% yield. Historically, this has been a good entry valuation. Goes ex-dividend June 18th.

    Disclosure: I am long UTF.

    Stocks: UTF
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Comments (10)
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  • Thanks. Very timely. down 4% today and the ex-date on 6/18.
    12 Jun 2013, 03:12 PM Reply Like
  • Thank you.
    12 Jun 2013, 03:17 PM Reply Like
  • Glad to see your blog on this fund. At a 12% discount this is quite an opportunity now for anyone with dividends to reinvest or who wants to rebalance and increase yield by rotating out of some other funds or stocks that haven't been so hard hit.
    12 Jun 2013, 08:36 PM Reply Like
  • 1.38% expense ratio? really?
    12 Jun 2013, 09:33 PM Reply Like
  • CEFA showing it's 2.06% !
    13 Jun 2013, 04:23 AM Reply Like
  • 0.62% of that 2.06% is interest expense, which is not a fee to the management but is the cost of leveraging the fund. That leverage benefits us, as investors, boosting our returns. Per the fund's most recent semi-annual report, they pay an interest rate of 1.2% for that leverage, far cheaper than anything most of us could achieve on our own if we chose to leverage our own investments via margin borrowing or otherwise. (And if your assets are in an IRA, like mine, then forget it, you can't leverage it.) So UTF is borrowing at 1.2% to support about 1/3rd of the total assets of the fund, which is invested in utilities and other infrastructure-type assets paying yields of perhaps 5 or 6%. The difference between the 5-6% return and the 1.2% cost of funds, or perhaps 4 or 5% on one-third of the fund, is what boosts the yield UTF (and other leveraged closed end funds) can pay compared to un-leveraged funds that buy similar assets.
    13 Jun 2013, 11:17 AM Reply Like
  • I got an open order in the $18.40 range so expect it to bounce here and never breach 18.85 =)
    13 Jun 2013, 02:43 AM Reply Like
  • HTD or UTF. that's the question? -perhaps both?
    19 Jun 2013, 01:10 PM Reply Like
  • Been six months .. and the discount has widened to 13.4%. Yes price has moved up a buck and stock yield is now at 7.15% .. but the wider discount ... do you still think this is a good entry point?
    31 Dec 2013, 02:12 AM Reply Like
  • it is even better!!
    20 Jan, 03:20 PM Reply Like
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