Seeking Alpha


Send Message
View as an RSS Feed
View fludolph's Comments BY TICKER:
Latest  |  Highest rated
  • Is Leverage Really An Advantage In Equity Closed-End Funds? [View article]
    LB, I seriously appreciate the effort you put into your articles - no fluff. I read them all.

    Comparing option and leverage funds is a great topic and the analysis was great, but I think it might have been more spot-on if the the leverage funds had been paired with option funds that had similar portfolio characteristics, at least in style if not specific stock content.

    The study uses EV's only leveraged equity funds ETO/EVT/ETG, two of which have portfolios that are 40-50% non-US. The option funds in the article are all at least 90% US, and EOS is much heavier in tech than any of the leveraged funds. I think a better set of option funds for this analysis might have been ETY/ETW/EXG. Also note that all three leveraged funds are "dividend funds" while ETY is the only option dividend fund.

    Segue - I think an underlying concept of EV equity funds is that every fund should have an aspect that generates income in down-markets, either dividends or options. So maybe EV leveraged equity funds might demonstrate improved down-market performance compared to the non-dividend leveraged funds from other investment groups. Another paper topic?
    Sep 25, 2015. 12:43 PM | Likes Like |Link to Comment
  • BUI: Has It Held Up In The Downturn? [View article]
    sumoman, the two debt-oriented CEFs in my portfolio, PDI and JRO, have a "slightly negative" correlation over the last year with virtually all of my equity holdings, including BUI, ETV, and UTG.

    The assetcorrelation website allows you to enter a portfolio of up to 16 stocks/funds and see their correlations over various periods, one month to two years. Free registration required.
    Sep 22, 2015. 12:04 PM | Likes Like |Link to Comment
  • Jobless Claims Rise Again [View article]
    oilyolin1, jobs gains for June and July were revised UP by 44,000. From the BLS Commissioner's statement:

    "Incorporating revisions for June and July, which increased nonfarm payroll employment by 44,000, monthly job gains have averaged 221,000 over the past 3 months."
    Sep 4, 2015. 11:56 AM | 1 Like Like |Link to Comment
  • Comparing 2 Tax Friendly Closed End Funds [View article]
    Surf, as I am retired, I am flow-based. I live off (most of) my portfolio's distributions - that's why I use IRR, which takes the timing of investments and withdrawals into account, rather than CAGR, to measure the performance of both my individual holdings and portfolio.

    ETW cut its distribution three times, a total of 35%, between late '09 and early '11. There have been no increases since then. A decreasing "flow."

    After buying ETW, the guide I started using to determine the safety of future distributions is whether a CEF distributes more than it takes in over the long-term, so I compare the NAV yield to the long-term NAV performance, which includes income from any option writing. ETW is distributing more than it's long-term growth, so I consider its level of ROC to be destructive which will likely lead to a future distribution cut. I sold my ETW holdings as I anticipate it's flow will continue to decrease.
    May 13, 2015. 01:40 PM | 1 Like Like |Link to Comment
  • My Favorite Financial Stock Offers 55 Consecutive Years Of Increasing Dividends [View article]
    I find the dividend history section of the NASDAQ site to be the most accurate and complete. It seems to include all US traded stocks regardless of their home exchange though it doesn't include mutual funds (OEFs).

    It lists distribution amounts to hundredths of a cent (4 places to the right of the decimal). Also all four dates: declaration, ex, record, and pay.

    Here's the link to CINF
    Apr 30, 2015. 11:24 AM | 1 Like Like |Link to Comment
  • A High Income, Balanced CEF Portfolio With Reasonable Risk [View article]
    I believe Yahoo reports only the "income" portion of the distribution.

    Note that CEFs warn in their prospectus' that their distributions do not reflect their performance, so this could be the reasoning behind the reporting.
    Apr 25, 2015. 10:41 AM | 1 Like Like |Link to Comment
  • Comparing 2 Tax Friendly Closed End Funds [View article]
    ETW looks terrible to me. While I did hold it from late '11 to mid '14 for a nice return, I feel I got very lucky (IRR of 18.2%). Overall its NAV has been nearly flat since the depth of the recession and its current NAV distribution exceeds its annualized NAV total return over 1, 3, and 5 years. Not sustainable unless foreign stocks perk up a lot.

    ETV has done better in all respects.

    That said, I currently hold ETV and ETO but watch them closely. In my opinion, Eaton Vance generally pays unsustainable distributions for too long before reducing them.
    Apr 18, 2015. 10:06 PM | 2 Likes Like |Link to Comment
  • ETG And ETO: What's The Difference Between This Pair Of Confusingly-Named Eaton Vance CEFs [View article]
    ETG lost about 70% of its NAV during during the crash while ETO lost about 65%. ETO has since recovered to about 67% of its pre-crash NAV while ETG to only 58%.

    ETO cut its distribution more, 35% vs 30%, but ETO's distribution was still 17% above its initial distribution while ETG was cut to its initial distribution. ETO's distribution has since been increased several times back to its pre-recession high, 80% above its initial distribution, while ETG has not increased since the cut, remaining at its initial distribution level.

    ETG does have a much lower (current NAV distribution/annualized 3 yr NAV TR) ratio, 46% to 76%. ETG looks ripe for a distribution increase, but management might be waiting until the NAV recovers a bit more.

    As a retiree and a (trying to become a) buy-and-hold investor, I prefer ETO's NAV and distribution performance, both since inception and through an economic cycle. Of course past performance ... yada, yada, yada.

    NAV values from Yahoo finance (XETOX, XETGX). Distribution values from CEFConnect.
    Feb 20, 2015. 11:02 AM | 1 Like Like |Link to Comment
  • Even The Woefully Underfunded Retiree Can Survive The Next Crash: Here's How [View article]
    George, a nit. CTL has not paid annually increasing dividends over the last five years as stated in the article. Starting with 3/2010 it paid a flat $0.725 quarterly for three years, then cut the dividend to $0.54 in 3/2013, flat for the last two years.
    Jan 16, 2015. 10:13 AM | 2 Likes Like |Link to Comment
  • A Diversified, High-Income, Lower-Risk CEF Portfolio For 2015 [View article]
    jorgemb, you are looking at price/NAV only and ignoring the distributions. JCE's 7% distribution (not dividend) is paid mostly (~90% in 2014) from long-term cap gains. (See CEFConnect for distribution details.) Some of the NAV is being sold for the distribution. That is why JCE's NAV/price hasn't kept up with SPY's. The JCE holder gets money in hand rather than increased NAV.

    However, as mentioned above, the 5 year total return CAGR for SPY and JCE, which includes the distributions for both, is nearly the same, 15.x%. They have performed nearly identically. But that assumes the distributions are taken as cash and not reinvested. If JCE's 7% distribution and SPX's 2.x% dividend were reinvested, JCE's 5 year TR CAGR would be about 4% greater than SPY's (assuming held in IRA so no taxes).
    Jan 6, 2015. 02:24 AM | Likes Like |Link to Comment
  • A Diversified, High-Income, Lower-Risk CEF Portfolio For 2015 [View article]
    Adam, you appear to be looking at price only.

    The 5 year total return CAGR for SPX is 15.45% (Morningstar) and for JCE is 15.9% (after expenses of 1.03% and "reinvestment losses" due to sale and distribution of most cap gains).

    Since total returns don't include reinvestment of distributions, if they were reinvested, JCE's much larger distribution would put its TR far ahead of SPX.

    JCE's cherry picking of the S&P500 looks pretty effective to me.
    Jan 4, 2015. 01:43 PM | Likes Like |Link to Comment
  • A Diversified, High-Income, Lower-Risk CEF Portfolio For 2015 [View article]
    While I generally like the portfolio, I too feel that ETW is a poor choice. Over the economic cycle it has failed to recover hardly any of the lost NAV and the distributions have also been cut and never increased. Its current NAV distribution to 3yr NAV TR is 97%. The distribution is too high for it to recover.

    I held ETW for a while, but moved to ETO which has shown significant NAV and distribution recovery. The higher 3yr NAV TR and slightly lower distribution yield make for a financially stronger fund and a distribution to NAV TR ratio of a very healthy 54%.
    Jan 2, 2015. 03:29 PM | 2 Likes Like |Link to Comment
  • Retirement: Income Only Or Total Return? [View article]
    Doug, thanks for the reply. WRT tax efficiency, to the extent possible I keep things in the most tax appropriate accounts: highest yielding qualified dividends in the taxable brokerage account and those with non-qualified distributions in the traditional IRAs. No Roth accounts. To minimize current taxes, all qualified dividends are withdrawn (15%), then from the IRA as needed.

    MRDs start this year. I currently withdraw more than the minimum, but when the MRD exceeds the needed withdrawal, the excess, after taxes, will be put in the taxable account. Haven't modeled that yet - it's a few years away.

    As for the excess income, the intent is to withdraw it, pay the taxes, and make it easy to actually use. Also leaving it invested could result in significantly higher taxes if there is a need to withdraw a large amount; might also exceed the $170K Medicare limit resulting in higher medical insurance costs.

    I have considering reinvesting the excess as you suggest to enable moving to more stable, lower-yielding stocks, but that would also reduce the (admittedly variable) excess income. I feel that the high excess income and large cash reserves provide sufficient long-term safety.

    I am looking for something easier to manage than individual stocks; I don't want to review every major price movement to determine if it is a sign of company weakness and, if so, choose a replacement stock. Eventually I won't be able to do this and my wife has no interest, so I am in the process of moving to carefully selected CEFs. These will be fewer in number and easier to monitor. They also more closely match our portfolio goals: high current income and lower capital growth that is closer to the 3.5% portfolio growth target. After 40 years of investments, I am prepared for the price volatility and trust the market, if not individual stocks, to recover.

    My current holdings are listed in my profile. I am slowly replacing individual stocks with CEFs that have NAV growth and distribution characteristics that suggest they can recover NAV after a recession. Generally, the NAV distribution should be less than 70% of the 3 year NAV growth rate. Most are less than 60%.
    Jan 2, 2015. 03:57 AM | 2 Likes Like |Link to Comment
  • Retirement: Income Only Or Total Return? [View article]

    Since we can't take it with us, I would take the position that the IOs might have lived a more comfortable retirement rather than accumulating a huge $16M estate. We would be quite comfortable passing the $3M estate to our kids and some charities. But of course other couple's/individual's goals will differ.

    Our retirement approach is to set growth targets for our "paycheck," portfolio, and distribution income. We chose 3.5% growth targets each year, about enough to cover inflation. This approach more or less removes the DGI/total return dichotomy from the discussion. The only question is whether an investment approach is likely to satisfy the targets.

    We have chosen to invest in higher-distribution stocks and funds (about 7.5% portfolio yield) that provide significantly more income than needed to cover the paycheck - our income is about 67% higher than the paycheck. In addition to protecting against distribution cuts, if the extra income is not needed to help meet the portfolio and income targets, it is taken as an annual bonus and added to our cash reserves.

    Any reserves above the "emergency" amount (equal to 18 months of paychecks) can be used to enhance our family's lifestyle. This gives us an opportunity, depending on the market, to safely take more income early in retirement when we will be more able to enjoy it, yet still leave an estate that would likely be able to fund our children's retirement.

    If this sounds "rich" it isn't. We need a portfolio yield of 4.5-5% to cover our paycheck, higher than a typical DGI portfolio yield of 3-4%.
    Jan 1, 2015. 11:57 PM | 1 Like Like |Link to Comment
  • Closed-End Funds Are Better For Income Investors Than Open-End Funds [View article]
    I recently retired (3 years) and more recently turned to CEFs (this year) as a way to greatly simplify portfolio management for myself and, when I am no longer able, my wife. I look to buy and hold CEFs that grow their distributions and NAV by at least the rate of inflation over the long term - I use a 3.5% goal. As such it is important to look at a fund's performance over at least one full economic cycle, i.e. since 2007 at a minimum.

    The author provides some good information about CEF's in general, but for a "retirement income" article, a chart showing distribution/NAV performance through a full economic cycle would would seem more helpful than one showing price performance during only the recovery phase. Using CEFConnect, we see that long-term, through two economic cycles, GAB and ADX have not kept up with inflation. ETW has shown virtually no recovery following distribution and NAV cuts. While RQI has grown its distributions significantly over over the last cycle, after a substantial cut, its NAV has not yet recovered, though the cycle continues. There are funds, such as UTG, KYN, and (maybe) JCE that show better distribution and NAV performance through a full cycle.

    While distributions from CEFs are higher than from bluechip dividend growth stocks, they are also much riskier. Substantial distribution cuts are the norm for CEFs following the start of a recession. Given a target withdrawal amount, for safety I target 67% higher distributions for a portfolio of CEFs, allowing for a 40% cut, while requiring only 33% more from a portfolio of dividend growth stocks. This is in addition to a substantial emergency cash reserve (18 month of withdrawals).

    Excess income not needed for reinvestment, to help meet distribution, withdrawal, and reserve growth-and-safety targets, can optionally be taken as an annual bonus to fund "nice to haves" during retirement.
    Dec 9, 2014. 03:07 PM | 1 Like Like |Link to Comment