“Unloved” Senior Loan CEFs: Featuring John Cole Scott
John Cole Scott, CEF Advisors:
They’re another group that had a very exciting 2013. They’ve had a rather unloved 2014.
There’s not as many senior loan funds as municipal bond, but there’s almost 30 available to investors. A new one just came out this quarter.
But when you look at them, they’re right now trading at about 9 discounts on average to net asset value, which is considerably wide. They’re yielding about 7.4%, which for loans that will generally rise with rising interest rates – which a lot of people think rates will rise at some point in the future – is a very favorable position to be in.
And you look at the guts. The guts have been doing real well. The guts are up about 6.5% on a one-year basis, but market price is up only one and change. So definitely you can tell that discounts widened.
Again, the closed-end fund story… when things are disliked and they’re well-managed and they have a reason to be in long-term, it’s when you go in and you invest.
Watch Video: http://investius.com/2014/12/15/senior-loan-cefs/