Three more fixed income closed end funds for your consideration.

music selection:  “Turning Japanese” — The Vapors

Every Friday, I present three opportunities in the debt space inside closed end funds.  I isolate CEFs that are yield rich and attractively priced relative to their net asset value.  These provide better safety for the long term investor than open end funds as there is no early redemption risk for the firm offering the fund.  They can and do hold their debt securities to maturity, effectively allowing 100% of duration risk to expire over time.  Open end funds are forced by liquidations to sell bonds at the worst possible time.

I personally try to keep an allocation to this space of about 40% of my taxable portfolios.  The result is cash flow (that is often on a monthly basis) that exceeds my annual budget. I have discretion to not trade in the markets for months or even years at a time if nothing attractive is on offer.  The best investors are always the ones who can afford to wait for fat pitches.

Advent Claymore Convertible Securities & Income (AGC) is a closed end fund that seeks total return through investments in global convertible and non convertible securities and utilizing and option writing strategy.  It pays income only distribution on a monthly basis.

  • Discount to NAV – 11.88%
  • Yield – 9.88%
  • Effective leverage – 40.91%
  • Expense ratio – 3.49%
  • Learn more

Brookfield Real Assets Income (RA) is a closed end fund that seeks to achieve its investment objective by investing primarily in Real Asset Companies and Issuers.  It pays managed distribution on a monthly basis.

  • Discount to NAV – 9.55%
  • Yield – 10.83%
  • Effective leverage – 21.08%
  • Expense ratio – 0.13%
  • Learn more

Eaton Vance Tax-Advantaged Bond and Income (EXD) is a closed end fund that seeks to provide tax-advantaged current income and gains through the use of a tax-advantaged short-term, high quality bond strategy and a rules-based option overlay strategy. It pays managed distribution on a quarterly basis.

  • Discount to NAV – 8.88%
  • Yield – 12.03%
  • Effective leverage – none
  • Expense ratio – 1.43%
  • Learn more

Devour your prey raptors!

Friday Fixed Income

Never miss another opportunity to devour prey!

4 thoughts on “Friday Fixed Income

  • February 26, 2018 at 5:32 am
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    Hello,

    I have a question.
    Can you explain how these type of investments will do in different economic cycles?
    What is the most risky situation in investments like these?

    best regards
    Chri

    Reply
    • February 26, 2018 at 4:31 pm
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      Chri,

      Expect these instruments to perform similar to bonds. The biggest risks are rising interest rates and inflation. The threat from rising interest rates can be mitigated by holding under the underlying instruments mature. That is their “duration” risk expires over time. I don’t have a good hedge for inflation. Some people like to hold gold but I don’t like the lack of cash earnings.

      Reply
  • February 26, 2018 at 5:49 pm
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    I’ve considered rolling bullish verticals on GLD as a way to earn returns on an expected upward bias in gold prices. Gold has traditionally gone up during Republican administrations.

    Reply
    • February 26, 2018 at 8:03 pm
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      I hope that works for you. Gold just doesn’t fit in with my income centric philosophy of trading the market. I like returns that I can actually spend on for example, french fries.

      Reply

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