Hey guys, finally back to adding CEFs to my account. Here is my new purchase today: HIF - Western Asset High Income Fund Price: $9.58 Discount: -11.05% Yield: 7.58% Here is the fund's strategy snapshot (sorry to copy but lazy to type lol): The Fund is seeking to maintain a high level of current income by investing primarily in a diversified portfolio of high yield U.S. corporate debt securities and high yield foreign sovereign debt securities. The Funds seeks Capital appreciation as a secondary investment objective. The Fund will invest at least 80% of its total assets in high yield U.S. corporate debt securities. The Fund will invest in securities rated BB or the equivalent. Here are the fund's Top Ten: Why I like this fund: 1. Nice broad exposure to US and Foreign debit markets with good diversity and risk is spread out. Largest holding is only 2.13% which is GMAC notes. We all know GMAC is the only healthy part of GM and GM's credit rating brings up the yield on those notes even though they have a lower risk profile. I like the top 10 with the exception of Ford but under 2% I can live with it. Not happy the 3rd largest are long-term treasuries but I like the emerging market of Russia and Brazil and Mexico. All in all wide range of assets in top ten but top ten is only about 10%. Big but not enormous. So I like the fund to add some international exposure and different US debt securities. 2. Dividend amount was increased from .056 to .06 in September and has stayed there the last few months. Always nice to see increasing dividend. 3. Discount starting to narrow from lows of 14% or so around April 2006. Looking at improving conditions in the fund which may have been confirmed by dividend increase. 4. NAV is at 52-week high. I am hoping that the increasing NAV trend continues. The NAV had been in a tight range of $0.35 all year so not a very volatile fund which is good since I want consistent income without worries of sharp share price drops. 5. Average duration of fund is 4.22. Not long, and not too short. Not sure what is going to happen with rates but if the FED cuts here and there next year it will help out and if not, the fund shoudl not suffer noticeably. 6. I am still looking it up but so far I do not see any leverage. So if rates keep rising I do not have to worry about leverage through floating preferreds eating into returns. So I am adding it to the portfolio and it should add good income and capital returns over the next year. I am long at $9.59.
Here is an interesting fund to grab some exposure to emerging markets: ACM Managed Dollar Income Fund- ADF Price: $7.48 Disc. -9.55% Yield 7.46% This fund has about half in the emerging market trio of Russia, Brazil and Mexico with some Argentina and (yech) Venezuela thrown in. This is a riskier fund and since I already have some exposure in these areas from the fund above I am not going to load up to much on it. However, the fund has had positive returns overall the last couple of years and the NAV and share price have been rising slowly recently. Dividend was cut in March but has held steady. I think if you have a good well rounded portfolio this can fit in nicely and share price risk can be diversified away significantly. I am long today at $7.49 and will watch it closely for large drops in price over time. In the meantime I will pocket good monthly income.
Coach - good thread, keep up the great work. When I was a broker I had one client that loved closed end funds and until I met him, I did not know much about them. Now, even though I am no longer a broker, I like to watch the closed end funds as potential places to park some money and get a decent income off of it. Keep up the great journal!
Ditto, I love this thread and have done very well with some of your CEF's suggestions. Coach, can I ask if you considered HIX as well as HIF and if so why did you choose HIF?
HIX did not come up when I was scanning the CEFs but a quick check shows they own about the same assets, however HIX has a larger percentage in U.S. treasuries in their top 10 holdings (at least 10%). I would lean towards HIF based on that.
Here is a very nice balanced global income fund: Evergreen Managed Income Fund (ERC) Price: $17.05 Disc.: -7.89% Yield: 8.21% The top ten holdings include debt issues from UK, Sweden, Australia, Canada and Denmark as well as U.S. debt securities, loans and preferred stocks and foreign corporate debt. The credit quality is a nice mix of about 50-50 of AAA and below BBB. Nav has dipped slightly leading to a narrowing discountbut share price is also on the rise and the dividend has been constant over the past year. Investments are spread out over several industries and maturities are in the 1 - 10 year range mostly. Good performance overall the past 3 years and a very nice yield. So to add some more international exposure as well as U.S. high yield debt, I am grabbing this at the open. Remember that the more diversified your portfolio of CEFS are across different sectors, the better you can diversify away share price risk and focus on high yield income. EDIT: In at $17.15 at the open.
For some exposure to commercial mortgage/loans and multi-family I like the following fund: American Strategic Income Portfolio (ASP) Closed-End ETFs -------------------------------------------------------------------------------- Fund Quick Facts As of 10/31/2006 Closing NAV: $12.22 Current Distribution Rate: 7.03% Closing Share Price: $11.10 Premium/(Discount): -9.15% -------------------------------------------------------------------------------- 52 Week High-Low NAV: $12.25-$11.88 As of 09/30/2006 52 Week High-Low Share Price: $11.1800-$10.3700 Dividend was recently raised to $0.065 from $0.06 and both price and NAV have been improving off of annual low points. Although there is so much talk of a housing bubble, it is focused on new buildings and current home sales. ASP invests mainly in loans/mortgages of Apartment Buildings and Shopping Centers. New home prices may drop but most shopping centers are still doing well with long-term tenants and strong consumer. Top ten holdings make up a large part of the portfolio (~30%) but it still is geographically diversified a bit and in different types of commercial properties. I think the yield and improving internals make it attractrive and that commerical mortgages will not suffer potentially like residential mortgaes should housing prices keep falling. Diversify this with other ETFs and keep a nice stop loss of 5% - 7% perhaps. Long at $11.19 today.