Closed end funds

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Nov 4, 2008 7:49 pm

The dead horse known as AG Edwards/Wachovia/Citigroup/Wells Fargo is growing tiresome of beating.

 
I am changing the subject.
 
Is anyone buying any closed end funds these days? I think the tax loss selling is out of the way and we might get a rally similar to 2003 when they pulled themselves out of the toilet.
I see some Eaton Vance funds on the buy list at a few firms (ETJ, ETY).
Nov 4, 2008 7:58 pm

I do too and with the way they've gotten hit you almost can get a cef yield with an open-ended fund. Their Dividend Income funds (the open ened) was yielding 10% on the C-share before last week's rally.


If I see an cef IPO I should short the thing. I do think there is some value somewhere in the God-forsaken cef world.
Nov 4, 2008 8:00 pm
Gordon Gekko:

The dead horse known as AG Edwards/Wachovia/Citigroup/Wells Fargo is growing tiresome of beating.

I am changing the subject. Is anyone buying any closed end funds these days? I think the tax loss selling is out of the way and we might get a rally similar to 2003 when they pulled themselves out of the toilet. I see some Eaton Vance funds on the buy list at a few firms (ETJ, ETY).

Interesting topic. The mentioned closed ends were picks from the past and clearly attractive buys in current market environment. We have been busy moving out many of these investments cuz honestley how will these managers keep up with the yields in a slowing market environment. The divs will need to be cut at some point, perhaps. Personally I like some of the old true blue names..T, GE, DOW, liking DE etc. Do very much appreciate your thoughts....

Nov 4, 2008 8:01 pm

watch out for leverage, but unleveraged funds with 20% discounts and 10% yields are out there.  Hard to believe they won't beat the market at some point here.

Nov 4, 2008 8:06 pm

A lot of Eaton Vance's Cef's rolled out in the last two years get the yield from dividend capture and covered calls. The international ones (last checked) are at double digit discounts paying 16%+.


Nov 4, 2008 9:55 pm

I like PEO here.  Also a few of the oldest equity funds- TY,ADX,CET  In  bondland HIO and PCF.  Have not been impressed with M. Bush so far.

Nov 5, 2008 12:30 am

I've been buying them over the last few weeks.  I didn't have a lot of time to research the management (too busy with my "real" clients) so I basically just went with the highest discounts.  I've never seen so many with +20% discounts. 

Nov 5, 2008 4:14 pm

I was a genius about a year ago when I bot DEX, JCE, BGY and ETW a year ago in th emid teens.... All cut in half!  Profit from my mistake - step in now.  You'll have a double when I am back to even.

Nov 5, 2008 5:32 pm

Whoever gets those things at the bottom will be money! ETJ is one I own and would feel ok buying as it throws off 10% but relative to other cef does not move around a lot.

 
Three cef muni funds I track went through the roof today which should bode well for the open ended funds as well (I hope to have something in the green).
Nov 5, 2008 5:50 pm
Gordon Gekko:

Whoever gets those things at the bottom will be money! ETJ is one I own and would feel ok buying as it throws off 10% but relative to other cef does not move around a lot.

 
Three cef muni funds I track went through the roof today which should bode well for the open ended funds as well (I hope to have something in the green).
 
We just had a conf. call with managers of Eaton Vance CEFs.  They were talking that the dividends in the covered call funds are pretty secure based on the volatility premiums (ie the VIX).  I hope it's true.
 
Your muni CEFs likely were up today because there was a guy (who looked like Mike Meyers) on CNBC who referenced a couple of them as a way to play the Obama presidency.  A little volume and BAM!
Nov 5, 2008 6:44 pm

I'm sitting in my office checking into some cef's for a client who just xfrd in. Some of these pigs are @ deep disc. and I can see that gap narrowing. Stay away from the leveraged ones because if they have too much lvg. and values fall far enough they can stop paying divs based on the fund rule. I just ran into that w/ PFN. Also, w/ the cvrd call strategy, you'll see some upside w/ a market rally but then it's capped because of the calls.  So the ones w/ a lessr % of call writing might be the best choices, i.e. 30-405 of the porfolio vs like 50-60% .

Nov 5, 2008 7:58 pm

ETJ will lag in a roaring up market. Right now, I'd take that bet. The Eaton Vance rep was steering me more towards the ETY's of the world with more upside.

 
I was surprised that some funds I own that have been moidered (AWP for instance) were up today on a pretty bad day. Tells me the sellers have sold and now you are looking at a 30% non-leveraged yield trading at a discountto NAV. Whether Global Reits are they play is another question.
Nov 9, 2008 10:16 pm

I have been going into CEFs fairly heavily lately. Selling open end to realize losses and moving the proceed into CEFs. I am not buying leveraged CEFs with only one exception. (an infrastructure play - I couldn't find a non leveraged doing the same thing)   Most of the CEFs I am using also can go open ended with 2/3's vote of shareholders. If the discount to NAV stay where they are it is a possibility. As long as the Yield is not supported by leverage I am o.k. with it. Many are supporting the yield selling principal. If a CEF is trading at $8 with an NAV of $10 for example, then the redemptions to cover the yield are being sold at $10. I'll take the deal of giving you $8 if you give me $10 back all day long. I would mention a bunch of the CEFs I am using but that would enable somebody to claim I was pumping. I am going to look at dumping if the NAV and trading price gain parity again. RJ has a great CEFs desk. My old wire house had one guy covering CEFs. RJ has a whole department does a great job of filtering out some of the CEF land mines. Who new? Better research from an independent firm!

Nov 10, 2008 7:30 am

Leverage is not the only landmine to be wary of in CEF's.  Many have a policy to pay a certain minimum per share amount which as someone alluded to above has eaten into principle for some.  ETFConnect.com may help you ferret some of this out.  I would seriously be careful of leverage and watch out for the spate of div cuts that funds like PIMCO (what?) have had to put in place because the policy has not been realistic in these times.  I think junk makes sense (maybe early though) as well is Muni's.  

Nov 11, 2008 9:19 pm
bancofamigo:

Leverage is not the only landmine to be wary of in CEF's.  Many have a policy to pay a certain minimum per share amount which as someone alluded to above has eaten into principle for some.  ETFConnect.com may help you ferret some of this out.  I would seriously be careful of leverage and watch out for the spate of div cuts that funds like PIMCO (what?) have had to put in place because the policy has not been realistic in these times.  I think junk makes sense (maybe early though) as well is Muni's.  

Nov 11, 2008 9:21 pm
bancofamigo:

Leverage is not the only landmine to be wary of in CEF's.  Many have a policy to pay a certain minimum per share amount which as someone alluded to above has eaten into principle for some.  ETFConnect.com may help you ferret some of this out.  I would seriously be careful of leverage and watch out for the spate of div cuts that funds like PIMCO (what?) have had to put in place because the policy has not been realistic in these times.  I think junk makes sense (maybe early though) as well is Muni's.  

 
 
Good advice