Not limited to mortgage REITs, panic grips another favorite of income investors, closed-end...

Not limited to mortgage REITs, panic grips another favorite of income investors, closed-end investment funds - notably those trading far above NAV for seemingly no other reason than their fat yield. The payouts on many of these are sustained by digging into capital rather than by earning a return on it. PGP -7.5%, PHK -7.8%, PHT -5.5%.
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Comments (8)
  • Paulo Santos
    , contributor
    Comments (33745) | Send Message
    One by one, every irrationality breaks.
    10 Oct 2012, 12:43 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3121) | Send Message
    This was one of the tells in 2007.
    You should list some Blackrock funds, not just PIMCO funds. is a good place to sift through the universe to find overbought funds.
    10 Oct 2012, 02:04 PM Reply Like
  • Ananthan Thangavel
    , contributor
    Comments (835) | Send Message
    This was actually one of the tells in the Great Depression if you go back that far. Back then, there were a ton of closed-end funds, especially because there were no mutual funds. The most popular ones were the highly leveraged ones run by "famous" managers who produced huge returns in the bull market. In addition to being 2x or 3x leveraged, these funds also sold at huge premiums to NAV. One by one, these funds fell, leaving many of their investors with a total loss.
    10 Oct 2012, 04:18 PM Reply Like
  • varan
    , contributor
    Comments (5685) | Send Message
    All except dividend growth stocks, for they dispense electrolytes.
    10 Oct 2012, 03:10 PM Reply Like
  • SmartyMarty
    , contributor
    Comments (18) | Send Message
    How can they be digging into capital when their NAV goes up every month?
    11 Oct 2012, 07:28 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (33745) | Send Message
    The NAV can go up for any given month depending on the behavior of the underlying - that doesn't mean it's not digging into capital.
    11 Oct 2012, 07:32 PM Reply Like
  • erniem
    , contributor
    Comments (592) | Send Message
    That's what "discount" means. People are willing to pay much more than Net Asset Value.
    12 Oct 2012, 12:33 PM Reply Like
  • fevermagill
    , contributor
    Comments (2) | Send Message
    Somewhat lost in the shuffle is the fact that Bill Gross bought over 600,000 shares the day that the shares momentarily tanked. His family's combined holdings are worth over $65 million according to SEC filings that are readily available on Business Wire.
    12 Oct 2012, 06:49 PM Reply Like
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