We discussed the firm’s investment approach, CEF basics, sectors and funds we currently see as attractive (Healthcare, MLP, Convertible Bonds, Sr. Loan, Equity Dividend and Debt focused BDCs), as well as, commentary on some of Chuck’s listeners CEFs of interest for his well-known “Hold It or Fold It” segment.
You can listen to the show by clicking this link: [Click Here]
Or, copy and past the following link: http://www.cefadvisors.com/Download/150630-MarketCallwithJohnColeScott.mp3
MoneyLife host Chuck Jaffe is senior columnist for MarketWatch. His three weekly columns are syndicated nationally, and his “Your Funds” column is the most widely read feature on mutual fund investing in America. In 2009, Chuck was named to MutualFundWire’s list of the 40 Most Influential People in Fund Distribution, the only journalist ever to make the list. Learn more on their website: http://www.moneylifeshow.com/
CEFs / BDCs Discussed:
AGC, BST, AOD, JQC, TCPC; during “Hold It or Fold It:” AWP, OXLC, CRF, RCG, CHY
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/
We recently released videos that comment on CEFs & BDCs data and our outlook for 2015 on our Vimeo channel as a summary of our Quarterly CEF/BDC Research Call. A replay and transcription are available on our blog as well.
2015 CEF/BDC Outlook Commentary for BDCs and CEFs (And Ways to Position BDCs/CEFs in a Diversified Portfolios): https://vimeo.com/126740284
Sector Update: Municipal Bond CEFs: https://vimeo.com/126738843
Sector Update: Business Development Company (BDCs): https://vimeo.com/126739002
CEF/BDC Activism, 1Q IPO’s & Recent IPO Trading Levels: https://vimeo.com/126739479
Note: The GER discount was incorrectly stated as at an “attractive discount” when it was at a premium to NAV, however down -30% from IPO price. We apologize for the error.
Municipal bonds are an asset most investors are familiar with and Scott suggested buying the BlackRock Long-Term Municipal Advantage Trust (BTA). The fund boasts a 6.3% dividend yield and while it’s not as liquid as some other muni bond funds, it has superior performance and 99% earnings coverage.
While its earnings coverage is above average, the fund also boasts moderate leverage, Scott said. Even better, only 7% of its portfolio is made up of non-investment grade bonds.
Turning to MLPs, he likes the Nuveen Energy MLP Total Return Fund (JMF). Many MLPs have been sold off along with other energy stocks, but for the most part, the pipeline business is unaffected by oil prices. That makes the group attractive and specifically, the JMF fund looks good with its 7% yield and superior performance to its peers, Scott said. Read more…
Closed End Funds are certainly not as known or as popular as mutual funds, but they can be a very productive investment, especially for those seeking yield, and are a worthy consideration for many investors.
John Cole Scott, second generation owner, is their Portfolio Manager and publishes the Scott Letter: Closed-End Fund Report. CEF Advisors an excellent source for info on CEF’s. John is a savvy investment analyst and articulately makes his case on opportunities through Closed End Funds. Learn more about Charlie’s radio interviews via: http://www.strategicinvestorradio.com/
For those that were not able to attend our Quarterly Research Call on April 13, 2015, we have the replay link and slides in PDF format below. This quarter we covered The Closed-End Fund Universe, both traditional CEFs and Business Development Companies (BDCs).
We are excited to offer coverage of BDCs alongside our coverage of Traditional closed-end funds. We produce 165 data points on traditional CEFs and 100 on BDCs in our weekly CEF Universe data.
GotoWebinar has a new feature that allows us to load the replay to their website, it can be accessed though the following link (The audio starts about the 10 second point):
If you have any issue with this format, please let us know.
Slides from the presentation can be downloaded in PDF format using the following
If you have any questions about the session or replay links please email Jennifer@cefadvisors.com or call us (800) 356-3508.
The transcription follows with slide notations: A PDF version is available [Click Here] or http://www.cefadvisors.com/Download/2015-04-QuarterlyCEF-BDCOutlookCallTranscript.pdf
April 10, 2015, Richmond, VA.— Closed-End Fund Advisors is pleased to announce an in-depth interview in The Scott Letter: Closed-End Fund Report with Jay Rosenberg of Nuveen Investments. Jay is lead portfolio manager for both: Nuveen Real Asset Income & Growth (JRI) and Diversified Real Asset Income Fund (DRA).
We found the interview to be a timely update on how investors can gain access to “Real Assets” or as defined by Jay as “contractually reoccurring income on a global basis”. Some highlights include that real assets have historically well outpaced inflation and they seek investments that hit their yield hurdle of 4.5% to 4.75% and that also have the best total return characteristics. They use different parts of the capital structure for their investment to manage both beta in the portfolios as well as interest rate sensitivity.
We also discuss how in real estate, occupancies are up. “It’s definitely a land lords market … [they] typically have pricing power in many parts of the world”. For perspective on the portfolio allocation, the strategy is unique in that they are not just focused on static coupons. Typically fifty percent of the portfolio is in equity securities. As of April 9, 2015, JRI shows a distribution yield of 8.2% and a -2% discount to NAV and DRA shows a distribution yield of 8.7% and a -10% discount to NAV.
If you are not already a subscriber to The Scott Letter, a subscription is free on our website www.CEFadvisors.com.
Once you sign-up, you will receive the interview as well as gain access to our firm’s periodic email updates on our services, CEF markets and various articles, videos, webinars and live CEF conferences or meetings we host or are otherwise involved with in some way. Subscribers can expect about 6-10 emails a quarter from the firm.
Free Scott Letter Registration: www.cefadvisors.com/scottletter.html.