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Core Performance Continues To Recover

Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

For the month of June, the Core returned 1.9% on price and 3.4% on NAV. The recovery in both price and NAV continues although at a slower pace than we have seen in prior months.

YTD, the portfolio is down 7.9%. We believe these numbers are strong compared to publicly traded alternatives.

  • Amplify High Income (YYY)
  • Invesco CEF Composite ETF (PCEF)
  • Matisse Discounted Closed-End Fund (MDCEX)
  • S&P 500 (SPY)

Even better is the actual trading portfolio which is a personal portfolio that trades around Core positions using the buy/sell rating thresholds on our google sheets. 

It has been a tough first half of the year. No doubt about that. We avoided a lot of the worst pain by staying away from the more risky and 'flawed' sectors like MLPs, Energy, and CLOs. That alone saved us dozens of percentage points so far this year. What we didn't see is the hit that mortgages - primarily non-agency mortgages- were going to sustain. Most of that was liquidity driven rather than credit, but there is certainly an element with the large percentage of loans in forbearance that are risky from a credit perspective.

Here is why that saved us a significant amount of percentage points:


Data by YCharts

In the month of June, all funds performed well with all funds producing positive returns.

Remember, our goal with the Core Portfolio is to build up this sleeve of your portfolio that is going to produce equity like returns with less than equity-like risks. In March, we did see risk on the Core more closely correlate to that S&P 500 like risk. But it is fairly rare and more of a function of the starting valuations that were present in early February with discounts beginning the crisis at fairly tight levels.

We want to do as little trading as possible. I let members decide if they want to trade more often or not. Most simply do not have the time. They are in operating rooms or offices or at job sites and don't have time to make trades all the time. As such, we let the individual member decide. When the rating flag flips to sell, they can decide to reduce, eliminate, or replace that position if they so desire. That is more the total return approach attempting to generate 'alpha'.

The model made a few changes in July reducing what we think is some discount and illiquidity risks and moving into funds we think have a better chance of additional NAV recovery.  

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Invest alongside a real portfolio manager and financial advisor with over 25 years experience managing assets- along with his dynamic team. Yield Hunting’s easy-to-follow low-maintenance models are aimed to generate a high single-digit yield for retirement income planning or fixed income allocations.

With a subscription to Yield Hunting, you get access to:

Our Three Portfolios that help create a safer and consistent 9% income stream:

  1. Core Income Portfolio This is our main model. It has about a dozen securities (almost all CEFs) with almost no equity exposure. The risk profile by NAV is less than half that of the S&P 500. It is a bit more passive than most portfolios, with only a handful of trades a month- making it very easy to follow even for the novice investor.Current yield 8.53%. 2019 return 19.56%
  2. Flexible Income Portfolio: This is our active trading portfolio. It is designed for more aggressive investors looking to maximize capital gains along with yield- looking for funds that have a high probability of mean reversion (extremely large discounts that have a good chance of closing in the short term). Current yield of 7.46% (some tax-free muni income). 2019 return of 23.14%.
  3. Taxable Income Portfolio: This portfolio takes a more tax-advantaged approach, attempting to maximize after tax gains by utilizing funds that keep an eye on tax liability.Current yield of 4.96% (mostly tax-free). Since inception (November 1, 2019) return of 2.96%.Peripheral Portfolio Database: This is aimed at diversifying the Core Portfolio by investing in equity CEFs and REITs, preferred stocks, exchange-traded baby bonds, ETFs, Mutual Funds, and other securities. It is less a full portfolio than a list of researched funds that we recommend for those that want to expand beyond the conviction list of securities but don't have the time or inclination to do the research themselves. This includes a "Safe Bucket" section detailing the highest yielding cash-plus securties where excess cash can earn upwards of 4%. The model portfolios are designed with real time pricing detailing specific "buy, hold, sell" ratings.

Our premium service is organized in the following manner:

  • Monthly Newsletter - Details the current investing environment, portfolio construction techniques and advice, and a review of our model portfolios. We do offer past issues for free. Simply message us that you would like to receive a past newsletter and provide an email address to send it to.

  • Weekly Commentary - Goes through the events of the week and things to watch for in the upcoming week. This also includes performance for our holdings and the effects the current market situation will have on them.

  • Yield Hunting Review - this will take a more macro approach to the market for more long-term

  • Spotlight - Several write-ups each month, with specific analysis on securities we want to bring to our members attention where we see specific opportunities.

  • Alerts - Buy/ sell alerts on securities within the portfolio as conditions warrant

And finally....

  • Access - You are not on your own! We are available weekdays during market hours via chat, private message, and email for any and all questions or concerns. We also offer a complimentary cursory review of your portfolio, so you know you are not going it alone and always have a professional's ear whenever you need it.

Why Yield Hunting?

While our service is aimed primarily at late stage career and retired investors, the strategy can also be used to lower risk by augmenting traditional equity investing via open-end mutual funds or ETFs. This includes those who have spent many hours researching and selecting the equity side of their portfolio, but don't have the knowledge or time to do the same for the fixed income side. We use high quality institutional research to avoid distribution cuts, opportunity risk, and other pitfalls which can derail your strategy.

Our Team

Four For The Price Of One! Being one of the larger services means we have a larger budget. We believe we've assembled some of the best talent on Seeking Alpha analyzing closed-end funds.

Our stacked team includes:

1) Alpha Gen Capital - I am a career financial advisor (non-practicing) and investor. Not someone from another career doing this on the side. The AGC team and I use detailed analysis to provide safe and actionable insight without the fluff or risky ideas of most other letters. Our goal is to provide a relatively safer income stream with CEFs and mutual funds. Maybe more importantly, we also help investors learn about investing and how to properly construct a portfolio.

2) George Spritzer - Another career financial guru who runs a registered investment advisor with a specialization in closed-end funds for individuals. George uses the following investment strategies: 1) Opportunistic Closed-end fund investing: Buy CEFs at larger than normal discounts to NAV and sell them when the discounts narrow. 2) Exploit special situations: tender offers, fund terminations, fund activism, rights offerings etc.

3) Left Banker - Is a retired individual investor. Left Banker is well known on Seeking Alpha for his analysis on closed-end funds. He is adept at analyzing rights offerings in a straight-forward manner so that investors can understand it. He has written over 320 articles- mostly on closed-end funds- and has over 11,200 followers.

4) Landlord Investor- Spent his career as a management consultant for public sector clients at a multinational consulting firm in the DC area. He has transitioned to a new career as a full time landlord. His investment portfolio is comprised of two parts -- broad-based index funds and income plays such as preferred stock, CEFs, and REITs. He also owns individual/baby bonds which he buys on margin to boost total return. Landlord is our 'individual preferred stock' expert analyst.


Analyst's Disclosure: I am/we are long core.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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