strong 52-week returns for closed end funds
Beliavsky
at big discounts". Looking at the closed-end fund section in the
current (Oct 12, 2009) Barron's, many funds have astonishing 52-week
market returns:
rank ticker 52-week-return
#1 PFD 278%
#2 FFC 258%
#55 ISL 100.1%
There are 55 funds with 52-week returns exceeding 100%. Looking at the
market price of a closed-end-fund alongside its NAV, for example
http://finance.yahoo.com/q/bc?s=PFD&t=2y&l=on&z=m&q=l&c=xpfdx , I see
that the market prices of some closed end funds are much more volatile
than the net asset values, and that big discounts to NAV can present
opportunities. I don't see such big opportunities now but plan to
monitor CEFs going forward.
(Background -- closed end funds (CEFs) differ from the more common
open-end funds the fund sponsors do not redeem shares at net asset
value (NAV), so funds can trade at significant premiums or discounts
to NAV.)
dumbstruck
> On Oct. 13, 2008 I posted a message here "closed-end fund are selling
> at big discounts". Looking at the closed-end fund section in the
> current (Oct 12, 2009) Barron's, many funds have astonishing 52-week
> market returns:
>
> rank ticker 52-week-return
> #1 �PFD 278%
> #2 �FFC 258%
> #55 ISL 100.1%
OK, but wouldn't PFF be a garden variety open end preferred fund
similar to PFD, yet looks lots better on this graph?
http://finance.yahoo.com/q/bc?s=PFD&t=2y&l=on&z=l&q=l&c=rpv,pff,pfg,hyg
I also include RPV which oddly seems to track PFD's good performance,
yet is a more traditional big cap value fund. And PGF, which has been
preferred-on-steroids since the bottom for obvious reasons. Or if you
want to think of preferred as a bond fund, see HYG which took quite
small hit yet is spewing a high yield around 10%.
Just food for brainstorming; not sure if these candidates that I have
been using to claw my way out of the March lows are interesting
compares to what you listed. I thought the greater diversity of open
end funds might let you meet your goals easier than finding a rare
underpriced CEF that happens to. A little harder to research now that
etfconnect.com has disappeared. (for selfish reasons I omit mention of
a favorite etf that I want to buy more of monday)
Tad Borek
> On Oct. 13, 2008 I posted a message here "closed-end fund are selling
> at big discounts". Looking at the closed-end fund section in the
> current (Oct 12, 2009) Barron's, many funds have astonishing 52-week
> market returns:
CEFs aren't usually on my radar because of what you're describing - they
have a layer of price volatility, based on supply/demand for the CEF, on
top of the volatility of the underlying investments. There isn't much
confidence in the price you'll get when it comes time to sell. Last
October was an extreme example of that, and there was another in December.
Actually, if you plug in some tickers I think you'll see that 10/10/08
was one of those off-the charts days for volatility, the market itself
had gone haywire. How haywire? One of the few issues I keep an eye on
had _intra day__ returns of over 30%. Not a misprint - the gap between
the low and high trades was 30%. So 52-week data this week is a window
onto illiquidity during last year's credit crisis.
But here's the rub: it was hard to do much buying because even small
trades moved the price beyond what would be acceptable for a normal
trade. The big discounts to NAV didn't last long, added up it might be
days or weeks for many of them. A small number of CEF owners bought at
those prices, but most simply saw their market price plummet, and then
rebound. You can get a sense of this by viewing "volume by price" data.
The WSJ charting area lets you do that, as do many other sites. Only a
tiny percentage of transactions happened at those depressed prices.
To generalize this: my belief is that a very patient trader can keep an
eye on these backwaters of the financial markets and find opportunities
that larger investors can't exploit. Of course, they don't come at this
magnitude very often. But the basic principle applies...look at illiquid
markets and buy when it looks like everyone's selling, and vice versa.
You need to have your homework done already on the security itself
though. And it's so sporadic I'd hardly call it a "core investment
strategy," more something to consider for chip-shots now and then.
-Tad