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Author: charliebonds Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 42  
Subject: Bond-Fund Scams Date: 2/28/2011 2:56 PM
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Sometime, when you’re totally bored, go to ETF Connect and poke around in the Closed-end Bond Funds. In particular, look at a category they call “Government” and pull the ticker-list. Then click on the “Distributions” tab and look at “Estimated Components of Distributions”. (An example is linked below.)What you’ll discover is that you’re accepting market-risk and interest-rate-risk to buy the fund, and then --in several cases-- paying a hefty management-fee to receive the return of your own money!

TICKER, % OF DISTRIBUTION THAT IS RETURN OF CAPITAL

ACG, 0%
EXD, 77%
FTT, 85%
IMF, 2%
WIA, 57%
WIW, 29%

http://www.cefconnect.com/Details/Summary.aspx?ticker=FTT
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Author: amuseing Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32 of 42
Subject: Re: Bond-Fund Scams Date: 2/28/2011 8:55 PM
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Good catch!.. unbelievable.... what bull dodo.

Took the time to check it out

Thanks for calling attention to it.

V.

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Author: Prophet43M One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33 of 42
Subject: Re: Bond-Fund Scams Date: 3/1/2011 8:54 AM
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I don't do bond or stock funds (actually I did own one muni fund until late last year).

Anyway, you helped to remind me one of the reasons why....risk that is not always obvious.

I don't like researching funds. It's easy for me to understand the individual bonds I own once I've done my homework (which is done before I buy and re-visited occassionally).

It's not always easy to understand all the movings parts in a bond fund. And after you do your research, just how up to date is the posted information anyway?

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Author: charliebonds Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34 of 42
Subject: Re: Bond-Fund Scams Date: 3/1/2011 7:54 PM
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V,

It wasn’t an astute catch on my part, more along the lines of basic due-diligence. I was trying to answer the question: “How are they paying that kind of a dividend in these market conditions?” The tiniest bit of digging discovered why. That doesn’t mean there might not be some good bargains in the closed-end bond funds. In fact, I truly believe there has to be. There are hundreds and hundreds of the funds, some of which have to be doing worthwhile things but, nonetheless, are being tarred with the same brush being applied to everyone else. “Interest-rates are going up”, as everyone supposedly knows. But we’ve been hearing that story for two years now and still nothing dramatic has happened. Obviously, eventually, rates will rise, just as, eventually, they fall again. That’s what rates and prices do. They go up and down. So one’s choices are obvious. Make a forecast and live by that forecast, or admit that one can’t know and put a judicious amount of money to work as one can or is inclined.

A good example of possible bargains is the muni funds. The sell-off began last fall for reasons that are absolutely sound. The issuers spent beyond their means and then spent a bit more, as becomes evident in the linked paper from Wells Fargo on state-budget shortfalls. https://www.wellsfargo.com/downloads/pdf/com/research/specia...

Should investors flee munis? That depends on why one is investing and how risk-tolerant one is. But, for sure, there comes a point when the price is low enough to justify the risks, particularly if one is buying across a basket of bonds, either directly or through a fund. To put the matter another way, what kinds of yields are corporates offering right now compared to munis? Or, vice versa, what kinds of yields are munis offering compared to corporates of comparable risk and maturity? E.g., take a look at some of the double-AA, insured GO's. To my admittedly-inexperienced eye, the credit-spreads relative to corporates are wide enough to be attractive, and I’ve been nibbling. Also, I’ve been trying to learn the bond-fund game well enough so that when the market does blow up, I’ll have my shopping-list ready.

Charlie

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Author: charliebonds Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35 of 42
Subject: Re: Bond-Fund Scams Date: 3/1/2011 8:01 PM
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Prophet43,

I like the ETF Connect website a lot and, to my eye, the info looks to be as thorough and as update as you're likely to find for free.

Also, there's another factor going on. As an article in this week's Newsweek on "information-overload" suggests, too much info, no matter how good, results in worse decisions. Therefore, less-than perfect info can be less of a problem, if it is easy to deal with, than higher-quality info that requires a lot of pre-processing.

Charlie

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Author: HonestAbeMartian Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36 of 42
Subject: Re: Bond-Fund Scams Date: 3/6/2011 3:36 PM
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I like the ETF Connect website a lot and, to my eye, the info looks to be as thorough and as update as you're likely to find for free.

fwiw, M* is the data supplier to ETF Connect.

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Author: charliebonds Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 37 of 42
Subject: Re: Bond-Fund Scams Date: 3/6/2011 3:44 PM
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Abe,

M* is an excellent website. I've used it for years. But I find the ETF Connect site easier to deal with, easier to download the info from.

To each, his own.

C

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Author: HonestAbeMartian Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 38 of 42
Subject: Re: Bond-Fund Scams Date: 3/7/2011 3:25 PM
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I was just lending more credence, such as it is, to your statement that the CEF Connect site is reliable...

I like free too. If it matters, M* has completely revamped its CEF reports to add a lot more data and information than they used to, but I still screen first entirely on the CEF Connect site.

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Author: charliebonds Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 39 of 42
Subject: Re: Bond-Fund Scams Date: 3/8/2011 1:00 PM
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You wrote: I was just lending more credence, such as it is, to your statement that the CEF Connect site is reliable...

Abe,

If you're going to quibble with me, or quarrel with what I said, then at least have the integrity to quote me accurately. The following is what I said:

I like the ETF Connect website a lot and, to my eye, the info looks to be as thorough and as update as you're likely to find for free.

I did not certify the the info was reliable which is a different standard. But since I have been misunderstood, I will rephrase what I said.

(1) I LIKE THE ETF CONNECT WEBSITE A LOT, AND I FIND THE WEBSITE EASY TO USE.
(2) YOUR OWN EXPERIENCE MIGHT BE DIFFERENT THAN MINE.
(3) USE THE FINANCIAL RESOURCES THAT MEET YOUR OWN NEEDS.

Charlie

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Author: Martian123 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 40 of 42
Subject: Re: Bond-Fund Scams Date: 3/8/2011 1:20 PM
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sorry charlie,

maybe I can rephrase my original note for you so even the dumbest person like me can understand this:

"LIKE CHARLIE, I like the ETF connect site a lot, and, because the data is sourced directly from Morningstar, the information is very high quality and reliable period. At least, as reliable and accurate as Morningstar can make it, but in my travels of looking at both the data on that site and numerous other sources in my 20 years of investing in closed end funds, I think anyone can use it with a high confidence the data is highly accurate. Of course, LIKE CHARLIE, says, through and updated isn't the same thing as reliable even though most people might conclude that saying reliable and thorough would be an equivalent expression as 'reliable' but it is always very, every important to quote someone EXACTLY or they might respond with a rather curious accusation."

So, perhaps you can see, me not trying to quibble, quarrel, or any number of other "q" words with you. The last thing I would want to do is 'quibble or quarrel' with anyone on these boards. just make money...

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Author: Martian123 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 41 of 42
Subject: Re: Bond-Fund Scams Date: 3/8/2011 1:24 PM
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darn - typo - thorough and updated not reliable and thorough or updated and thorough or reliable and updated. Just to be safe, refer to the EXACT wording before...

:)

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Author: Martian123 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 42 of 42
Subject: Re: Bond-Fund Scams Date: 3/8/2011 1:54 PM
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P.S. to be safe, after this post I will remove this board from my list....

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