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I established positions in several ETF's and CEF's with pre-set liquidation dates over the course of last year or so. Some I've exited by now. One just got liquidated. Thought I'd share a few things. Perhaps someone will find it helpful.

The fund that just liquidated was trading with ticker symbol JHD. It was one of Nuveen's high-yield target-date CEF's. The full name: Nuveen High Income December 2019 Target Term Fund. There was also JHA (Nuveen High Income December 2018 Target Term Fund) at one point. JHY (Nuveen High Income 2020 Target Term Fund) and JHB (Nuveen High Income November 2021 Target Term Fund) are still trading and are next on the liquidation schedule. All of these funds were/are supposed to liquidate around Dec 1 of the target year. So far they have to my knowledge but Nuveen leaves the door open to extend that date and potentially to convert the fund to something like a an ordinary CEF w/o a target date. To me, that's not really good news - I'd like more certainty.

So in practice, JHD traded up until about a week before liquidation. The last day of trading was Friday, Nov 22. After that the fund was showing up only under its CUSIP in my Fidelity account. Could not do anything to the position. Today, Dec 2, funds finally became available and the position disappeared. (The announcement stated that liquidation would take place on or around Nov 29.) The fund page is gone from sponsor's Web site too.

The liquidation value was just under $9.91/share. It is interesting that while on Nov 22 price was $9.90, the CEF was trading at a discount even on Nov 21 if I remember correctly. It could be had for $9.85-$9.86 a week or two prior to last day of trading. Oh and NAV was $9.89-9.90 by then. It's kind of odd to see basically a money market fund trading at a 50 bps discount.

Speaking of money market... By fall of 2019, the underlying assets transitioned to about 80-90% money market (can't recall but I think it was commercial paper and/or a money market fund) and the rest being high-yield bonds with many maturing in 2020 or later. I imagine that upon liquidation, many of those bond positions were just moved to some other fund under the Nuveen umbrella as opposed to actually sold to raise cash. I bet Nuveen has plenty of cash for something like a liquidation of a fund with $300 million in assets.

Distributions were gradually declining -- 2019 income was much lower than 2017 and 2018 -- as more and more bonds were being replaced with money market assets. In terms of yield %, it was down to about 4 in 2019 but was over 5% (over 6%?) in earlier years. That's pretty standard with these types of CEF's and ETF's. The final distribution was retained and was disbursed during liquidation. Otherwise the fund paid income out monthly. The fund was supposed to return $9.86/share or more per prospectus and it exceeded it by retaining the final monthly distribution.

Not all CEF sponsors have good information readily available. Some are hiding it for whatever reason and others just don't share much. Nuveen looks to be quite a bit above average. (I'm not affiliated with Nuveen in any way.) So I might jump into it with a Nuveen CEF's in the future. Will depend on several factors incl. discounts to NAV. We'll see.
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Thought I'd share a few things. Perhaps someone will find it helpful.

I certainly did, thanks for sharing Stas.

In 2020 I am planning to fill in my 2028 corporate bond ladder. I like plucking around and picking individual corporate bonds, but I am contemplating just filling in my 2028 rung with BSCS. Either way I go, the yields look pretty disgusting.

Fidelity is showing BSCS with a Distribution Yield (TTM)of 3.39%, but to fill in a 50K bond rung for 2028 (assuming a liquidation price of around $20 per share), I would have to purchase close to 55k worth of BSCS at the current market price of $21.91. Just doing some rough math, it appears to me I would actually be getting an overall return of around 2.5% per year if I bought now and held through liquidation.


Thanks,

Jim
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Invesco has a nice line up. My next liquidation is BSJJ actually which is one of the high-yield funds in the BulletShares lineup! :) Those target-date investment grade corporate bond ETF's are very nicely priced by both Invesco and iShares at 10 bps but YTM's are pretty awful. When I ran my analysis a few months ago not one was above 3% YTM (unless you stepped into the HY space which Invesco offers too). Note that high-yield ETF's are cheaper at Blackrock/iShares at the moment by 7 bps. I wouldn't be surprised if Invesco dropped fees soon.
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