This month’s video takes an in-depth look at the closed-end fund marketplace. Charts include both diversified CEF indexes and single fund names. Overall the trend remains solid, however we are starting to see stretched premiums and tight discounts across the entire spectrum. Risk is high and caution should be warranted at this stage of the cycle. Video recorded after the market close on February 8, 2017.
The double edged sword of the Federal Reserve’s interest rate policy is rearing its ugly head this morning as investors identify the true psychological meaning of a continuation of the status quo. The persistent dovishness points to a potentially weaker economy than most market participants were hoping for, which doesn’t sound so great, even though low interest rates could continue to spur growth into year-end. Read more
When managing a portfolio of closed-end funds (CEFs), often times the valuation of funds you do own are less important to consistently evaluate than the funds you don’t own. This is a key reason why every CEF investor should maintain a watch list of familiar funds on their radar screen. Read more
Ever since I began managing money I have always gravitated toward multi sector income funds in lieu of traditional aggregate bond strategies as a way of increasing income and lowering volatility. The innate problem with core bond strategies is that they traditionally weigh the balance of their holdings based on the total size of the U.S bond market. This translates into a nonsensical practice of lending the largest slice of a client’s assets to the most indebted issuers.
I believe this method is fundamentally flawed when evaluating the creditworthiness of an issuer and its ability to ultimately service its debt load. Conversely, seeking out responsible issuers on a global level that assume debt to fund productive assets or new processes can make for a more sound investment. Read more