December 8, 2014, Richmond, VA.— Closed-End Fund Advisors is pleased to announce an in-depth interview in The Scott Letter: Closed-End Fund Report with Donald Crumrine and Chad Conwell. Donald is portfolio manager to the funds’ advisor and chairman of the board, CEO and director of the firms funds: PFD, PFO, FFC, FLC, & DFP.
We found the interview to be a timely update on how investors can gain access to preferred equity exposure. Some highlights include the percentage of the funds’ dividends that were tax beneficial with qualified dividends (QDI). We also covered how the preferred equity market has changed since the financial crisis and how last year all actively managed preferred funds beat their index or ETF counterparts.
We also discuss how the funds are being positioned in the current economic and interest rate environment. 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.
Free Scott Letter Registration: www.cefadvisors.com/scottletter.html.
After last year’s difficulties, closed-end funds with municipal bonds now appear relatively attractive for discount-seeking investors, says John Cole Scott of CEF Advisors.
Investius:
What a difference a year makes. After last year’s difficulties, analyst John Cole Scott of CEF Advisors believes the muni sector of closed-end funds now appears relatively attractive for discount-seeking investors.
John Cole Scott, CEF Advisors:
Muni bonds in the closed-end fund world is a big, a third, of the chunk of funds out there. And if you look at it right now they’re trading at about an 8 discount… This is from our closed-end fund data dated October 17th. And if you look at a longer term, 10-year average discount for muni bond funds, being this wide is more than a 2 standard deviation event, so yes, definitely on the cheap side. We know they got hurt in 2013, but on a one-year basis their net asset values are up about 19% year to date total return and market prices are up about 16% on a one-year total return basis.
Investius:
As some investors may have noticed, muni funds have come a long way since last year’s decline.
Scott:
Munis had a horrible 2013. They started the year off, they peaked at a 3 premium, they bottomed out, I think, at a 13-14 discount in the middle of the fourth quarter. And so, if you think about the sector, we were very cautious about them in first quarter of 2013, because we like the structure, we like the guts, we like tax-free bonds, but we felt that as a whole there… very hard to find value in that area, versus now it’s very easy to find value.
View Video: http://investius.com/2014/11/17/muni-cefs-2/
DISCUSSION WITH FINANCIAL ADVISORS – Webcast Replay
- Research and Portfolio Management Tips from CEF Specialists
- How to Manage a CEF Portfolio through Rising Rates
- Trading a CEFs for Relative Value Swaps vs. Market Timing
- Current Attractive CEFs
Panelists:
Note: The following is an edited summary of the transcript from the panel.
ELI: All right. I think we’ll just get started here. I’m Eli Eliasek, I’m the closed-end fund research analyst for Bank of America. Most of the speakers at the conference today have been portfolio managers at CEFs. You have also heard from closed-end fund analysts, like myself from the major wire-houses.
This panel includes closed-end fund analysts and portfolio managers of closed-end funds, so it offers a diverse span of perspectives. We have John Cole Scott, Executive VP of Closed-end Fund Advisors and a portfolio manager there, and Rob Shaker of Shaker Financial Services. Both of them run portfolios of closed-end funds. I have a few prepared questions for them and then we’ll open it up to questions from the audience.
I will ask each of you to offer a response to all questions. Let’s hear from John first. How do you first set up a portfolio of closed-end funds, what’s your process, and how do you manage that portfolio once it’s set up? Read more…
We recorded this video to help investors and financial advisors get a sense of what to expect and look for when seeking federally tax-free income in municipal bond CEFs. We focused on answering the following questions:
1. Why would someone buy municipal bond exposure through a CEF vs. other options?
2. One-third of all CEFs are focused on municipal bond, are they attractive now?
3. What is going on with earnings and UNII trends for municipal bond CEFs?
4. Why type of investor typically buys municipal CEFs?
5. What does a typical municipal bond portfolio look like as a CEF?
6. What are some key things you look for in a municipal bond CEF?
7. What are the risk factors to watch for with municipal bond CEFs?
Muni investing through CEFs is the only way our firm knows that you can take a leveraged muni bond portfolio and keep the tax-free nature of the yield vs. applying leverage in your own investment account. Also, when discounts are as wide as they have been recently, it is easy to argue that you are getting the professional management for “free” because you are buying for “extra yield” from the discount than the friction or drag of management fees on the portfolio’s net asset value (NAV).
We regularly give updates on all CEF sectors including municipal bond CEFs in our quarterly CEF research call and periodic Municipal bond webinar.
Watch Video Here: http://vimeo.com/johncolescott/muni-cefs
Capitala Finance has more equity exposure than most other debt-based business development companies so it offers higher potential upside, said John Cole Scott, Portfolio Manager for Closed-End Fund Advisors.
Scott added that Capitala is still a relatively new fund so it is still attracting new investors.
He is also bullish on Medley Capital, saying this highly liquid BDC has swung to a discount after selling at a premium for years, providing a nice entry point for a quality portfolio.
Finally, Scott is positive on New Mountain Finance, saying a recent secondary offering provides investors with a solid entry point. Note: BDCs in this video: CPTA, MCC, NMFC
Click [Here] to Watch Video: http://www.thestreet.com/video/12935105/capitala-medley-new-mountain-finance-offer-bdc-opportunities.html
For those that were not able to attend our Quarterly Research Call on October 9, 2014, we have the replay link and slides below. This quarter we covered The Closed-End Fund Universe, both traditional CEFs and BDCs.
We are excited to now offer coverage of Business Development Company (BDC) CEFs alongside our coverage of Traditional CEFs.
Link to Webinar replay slides:
http://www.cefadvisors.com/Download/2014-1009-CEFUpdate-Outlook.pdf
Webinar Replay:
http://www.cefadvisors.com/Download/2014-1009-CEFUpdate-Outlook.wmv
Overview Traditional CEFs: According to our CEF Universe Service dated September 30, 2014, during the second quarter of 2014 the traditional closed-end fund universe ended with 581 funds totaling $266.5B in Total Net Assets, which reflects a net asset growth of about +5.9% year-to-date. There were 229 total Equity funds and 352 total Bond funds. The average Discount to NAV is -7.9%, the average Market Price Yield is 7.1%; 7.9% for Equity funds, 7.4% for Taxable Bond funds, and about 6% for Municipal Bond funds. In general, discounts have widened about -1 ¾% during this quarter and a -0.8% below the quarter’s average Discount per fund. US and Non-US Equity funds had generally flat discount trends, though the widening was more prevalent in the other CEF sectors. This makes many CEF groupings and individual funds very attractive for investors willing to take a slightly contrarian view of the current market environment. Read more…
October 6, 2014, Richmond, VA.— Closed-End Fund Advisors is pleased to announce an in-depth interview in The Scott Letter: Closed-End Fund Report with Dr. Daniel R. Omstead. He is President and CEO of Tekla Capital Management, LLC
(“Tekla”). He is also President of H&Q Lifesciences Investors and H&Q Healthcare Investors.
We found the interview to be a timely update on how investors could gain access to Biotech and Healthcare stocks (public and private) as well as their new fund (THQ) focused on a more income based healthcare strategy. We also discuss how the funds are being positioned in the current economic and interest rate environment. 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.
Free Scott Letter Registration: www.cefadvisors.com/scottletter.html.
