Advent/Claymore Global Convertible Securities & Income Fund Looks Pretty Cheap

| About: Advent Claymore (AGC)

The Advent/Claymore Global Convertible Securities and Income Fund (NYSE:AGC) is a closed-end fund that was formed in May 2007. AGC seeks total return from current income and capital appreciation. The fund invests at least 80% of the portfolio in convertible securities or non-convertible income securities from US and non-US issuers:

  • At least 50% in convertible securities
  • Up to 40% in non-convertible income securities
  • At least 50% in foreign securities

The fund uses leverage and may invest in securities of any credit quality including securities below investment grade (e.g. junk bonds or high yield). AGC also uses a covered call option strategy on up to 25% of the portfolio, which allows it to pay out larger distributions.

This is the asset class breakdown as of Oct. 31, 2011:

Asset Class Breakdown (10/31/2011)



High Yield




AGC has a spotty NAV performance record. It has performed well in bull market periods and poorly in bear market periods. It was walloped in 2008, losing over 56% of its value.

I see it more as an attractive short-term swing trade here, rather than a long-term buy and hold investment. Here is the total return NAV performance record since inception:


(partial year)










US/International Allocation (as of October 31, 2011)

United States




Credit Quality Distribution

Investment Grade


Below Investment Grade


Not Rated


Fund Management

Advent has managed convertible securities since inception in 1995. It has managed high-yield securities opportunistically in its convertible strategies and have managed a dedicated high-yield convertible strategy.

Here are some summary statistics on AGC:

Advent/Claymore Global Convertible Securities Income Fund

  • Total Assets: 401.1 Million Total Common assets: 316.1 Million
  • Annual Distribution (Market) Rate= 13.04%
  • Last Regular Monthly Distribution= $0.0664 (Annual= $0.7968)
  • Fund Expense ratio: 1.93% Discount to NAV= -12.96%
  • Portfolio Turnover rate: 125%
  • Credit Rating: 80% below investment grade or unrated.
  • Effective Leverage: 21.21% (1.43% interest rate)
  • Average Daily Volume (shares)= 103,000
  • Average Dollar Volume = $0.85 Million

AGC is currently selling at a discount to NAV of -12.96% compared with the 6-month average discount of -5.27%. The 1-Year Z-Statistic is -2.49. This means the current discount to net asset value is about 2.5 standard deviations below the one year mean.

AGC is a moderately liquid stock and usually trades with a bid-asked spread of about two cents but with fairly small lot sizes available on the bid and asked. I believe AGC has been hurt by recent tax loss selling and may be an attractive purchase at the current price level with the possibility of a narrowing discount and price increase early next year.

Disclosure: I am long AGC.

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