http://online.barrons.com/article/SB500014240531119043990045... , or, for a `free pass` to read the article, web search for the case for closed-end fundsCEFs, closed-end funds, are trading at large discounts to NAV (net asset value), last seen in 2008 for taxable and muni bond CEFs (equity CEFs are cheap too but so they were one and two years ago -- the real bargain right now are bonds-focused CEFs).See the article for specifics. The article doesn't mention NKX, Nuveen CA ATM Free Muni, which is my favorite since I'm a California resident -- 6.82% triple-tax-free coupons are sweet indeed (it does mention NRK, the NY State equivalent, very similar at 6.9%). They've both rallied this week (+4.94% for NKX, +2.64% for NRK), but I think they're still bargains depending on your State of residence.
Only problem is the leverage in many of the funds.
Only problem is the leverage in many of the funds.If you see it as a problem, you can easily pick non-leveraged funds. E.g, to stay within Nuveen's family and California munis, NCA (yielding 5.04%) vs NKX (modestly leveraged and thus yielding 6.82%).They had very similar behavior over the last 3 months, but if you look back a year, NCA -9%, NKX -17% -- that's where you see leverage vs lack thereof. You pays your money and you takes your chances...!-)Me, buying NKX recently at `distressed` levels, I deliberately chose to go for their modest and prudent leverage. Somebody who's otherwise leveraged, or contrary to even modest leverage in principle, can easily choose non-leveraged funds like NCA. No prob: they're both bargains!-)
I am not and probably never will be a muni investor for a variety of reasons. However, I do traffic in taxable fixed income CEFs and they have sold off to similar discounts to the muni CEFs. While I have a reasonably healthy risk appetite, it is hard for me to get way out in duration with a leveraged bond CEF of any stripe in a world where there is a huge amount of uncertainty about the future path of interest rates. You might well make a killing, but be sure you understand the risk and accept it.FWIW, I have been scarfing up CEFs at big discounts lately: GIM, PEO, BTZ, ACG, PPT, etc.
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