bsharvy

Trading Closed-End Funds - An Update

CET is certainly cheap, but there hasn't been any insider buying in a long time. It might be a good value, but it wouldn't qualify as a buy in this informal screening system.

As for dividing vs. subtracting, the answer is that I don't know. It's just a different system. As calclay says, a ratio of discount/fee prioritizes low fees, compared to simply subtracting the fee from the discount.

Trading Closed-End Funds - An Update

Oops. In my comment above, I should have said discount/fee ratio.

Kevintx is right about a nice feature of foreign funds. The Swiss Fund (SWZ) gives you access to Roche and Nestle, two blue chips that US investors can only trade in the Pink Sheets. The Swiss Fund also has a policy have not hedging currency, so it's an indirect way of buying the Swiss Franc (a traditional safe haven).

Trading Closed-End Funds - An Update

The "M.Star" column is the Morningstar rating. The "Insiders" column is my semi-subjective opinion of the strength of recent insider buying (3 is best).

There's more detail about the system in the original article (this article is an update). Briefly, the fund never buys a CEF with a fee/discount ratio under 5 or no insider buying in the last year. Discounts have widened quite a bit since I first started testing the system, so now it is easy to find fee/discount ratios of 10 or more.

A System for Trading Closed-End Funds

insidercow.com, finance.yahoo.com, money.msn.com....there are many sources for insider trading.

A System for Trading Closed-End Funds

I expect modest yield and modest performance from ADX, MXF, and SWZ. I own the latter two. UTG is probably safe too. A lot depends on which sectors will do well, and that's very muddy right now. Will energy continue to do well, or is it just spiking because it's a safe haven? Is commercial real estate bottoming? These are hard questions to answer right now.

A System for Trading Closed-End Funds

The symbols are given in the charts, e.g. ADX. Dis./Fees is the discount/fees. It's the basic way of measuring value in this system. Automatic sells in this system happen if the dis/fee ratio falls below 5, or there has been no insider buying in over a year. Sells that involve more judgement are certainly possible, for example if a CEF had a dis/fee ratio of 6 and insider buying 9 months ago, and its strategy was already held by another CEF, I might dump it and buy something else. The basic idea is to narrow the possibilities down to a small pool, and then use best judgement within that pool. The best performing CEFs that have qualified in this system have been emergining market stocks: LAQ, CEE, ETF for example.