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Closed-end fund discounts show some panic in high-yield

Dec. 16, 2014 3:12 PM ETHYG, JNK, HYLD, SJB, UJB, SPHY, ANGL, QLTC, HYLSBy: Stephen Alpher, SA News Editor2 Comments
  • BMO Private Bank CIO Jack Ablin likes to gauge investor sentiment by looking at closed-end funds, particularly the gulf between price and net asset value.
  • As far as high-yield goes, the ten largest junk CEFs are currently trading at an 11% median discount, reflecting some level of concern, but nowhere near the panicky 30% discount at the height of the financial crisis.
  • Fair enough, says Barron's Chris Dieterich, but that 11% discount is still the widest since 2009, and far greater than the spread seen during 2013's "taper tantrum," or during the volatile time after S&P downgrade the U.S. in 2011. Unless the gulf is a sign of worse things to come, now just might be the time to go shopping for high-yield.
  • ETFs: HYG, JNK, HYLD, SJB, ANGL, HYLS, UJB, XOVR, QLTC

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