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Sell BDCL, Buy IGD

I’m harvesting a tax loss and redeploying cash.

music selection:  “Broken Wings” — Mr. Mister

weigh-in:  214.2 +3.6 – ouch, worst weekly performance since I got started.

My first action today was to harvest a tax loss.  I was up overall after distributions in BDCL but the capital loss was pretty steep resulting in an ETN that badly underperforming since 2014.  I am also wanting to limit exposure to ETNs.  Unlike ETFs, if an ETN closes shop and liquidates, the underlying bank does not have to immediately disburse funds.  They are under no obligation to return capital until the underlying note matures so investors can be stuck without access to their cash for years.  I sold out of BDCL at 19.28 a share.

My next action was to redeploy the proceeds from the sale.  Longtime raptors know I love Closed End Funds.  These funds do not create and liquidate shares based on demand like an ETF.   Instead there is a fixed number of shares and their value floats.  Oftentimes, you can find these funds selling for significant discount to their Net Asset Value.  That is the case today with IGD as shares are trading for almost a 12% discount to the underlying assets.

This CEF is a Voya product and is a global equity fund that focuses on high dividend stocks.  It selectively writes covered calls to boost income and sometimes hedges foreign currency exposure.  I got in at 7.02 a share for a 12.99% annual yield.  This fund complements my options trading well but is completely passive on my part.  I just sit back and collect distributions.  I also stand to earn some capital gains if the discount to NAV reverts to mean.

Devour your prey raptors!

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