Investius Interview: Capital Link’s CEF/ETF Conference in NYC – “CEF Yield”
If you’re looking for yield, closed-end funds may interest you, says John Cole Scott of CEF Advisors. But remember, CEF distributions may change. [Watch Video]
John Cole Scott, CEF Advisors: Closed-end funds are more than yield and discounts. They’re manager performance and they’re asset allocation. So you don’t just pick a fund because it has a high yield. It needs to fit in your portfolio. You need to have a reason that you’re there.
Investius: If you’re one of many investors looking for yield, closed-end funds may interest you. John Cole Scott of CEF Advisors even calls them, as he put it, “yieldy.” That’s yield with a “y.” But he also notes that closed-end fund distributions are not like bond coupons. Payout levels may change, especially in a rising interest rate environment.
John Cole Scott: So a lot of closed-end fund investors don’t seem to realize that closed-end funds aren’t coupons or bonds. I always say that closed-end funds are listed equities that either derive their value from equity or bond “guts.” An d that the distribution policies are policies, not promises, and can’t be thought of like coupons on bonds… Ninety-seven percent of closed-end funds changed their distribution policy the last time rates went up. Sixty-five or so percent did it, from our data, in the last year. And almost half, 45%, did it in the last six months. So you can’t think of a distribution policy as stable. They go up and they go down, and you have to study them, from our research.
Watch Video: http://investius.com/2015/05/03/cef-yield/