Chamois16

Timing the Addition of a CEF to Your Portfolio

Just to be clear. The 1.51% "other expense" is attributable to leverage costs

Annual Expense Ratios
As of 06/30/2008
ACG Common Shares
Management Fees 0.72%
Other Expenses 1.51%
Total 2.23%

Timing the Addition of a CEF to Your Portfolio

The 2.2% expense ratio is very misleading. ACG's comparable ratio is 0.72%, well below normal for actively managed funds. ACG uses debt for funding its leverage rather than auction preferred shares (ARPS), so the interest on the $1B loan appears as "other interest" in the expense ratio.

Had ACG used ARPS, the required dividends would have shown up as liabilities on the balance sheet rather than an expense in the income statement.

This environment shows the advantage of active management, as treasuries lose favr.