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Closed End Muni Funds....what do you think
Old 02-12-2016, 08:35 AM   #1
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Closed End Muni Funds....what do you think

I'm frustrated by the fall in equites and the lack luster performance on intermediate bond funds so as an experiment I'm thinking of putting a small amount into closed end muni funds....what do you think.....I worry about the leverage, but though a few grand would be a useful experiment.
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Old 02-12-2016, 08:43 AM   #2
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I own muni CEFs for years, my current largest holdings are PML, KTF and NMZ. However, IMO now is not a good time to buy them since they are either hitting their all-time or 52-week highs. Morningstar has a discussion forum dedicated to CEFs. You might visit there to take a look.
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Old 02-12-2016, 09:43 AM   #3
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I think CEFs have some useful features. For one, they don't have to sell investments when the shareholders divest, and secondly they can use leverage.

I think CEFs are particularly good for risky (less liquid) assets, and also just as a way to use leverage without doing it yourself.
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Old 02-12-2016, 06:03 PM   #4
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Thanks for the M* information and the heads up on price. I'll have a look, but I think I'll dip my toe in with Nuveen CEF Munis.
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Old 02-12-2016, 06:30 PM   #5
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Who buys the initial offering on these funds? They always go right into a discount to NAV almost immediately.
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Old 02-12-2016, 07:59 PM   #6
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Watch out for premium/discount, you can easily get burned. Also check the leverage of the CEF you are interested in. Last thing is, some are not very liquid, thinly trade, wide spread between bid/ask.


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Old 02-12-2016, 08:54 PM   #7
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Check out annuities
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Old 02-12-2016, 08:55 PM   #8
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Nuveen sponsors a site CEFConnect that focuses on closed end funds. You can screen funds there.

CEF Connect Fund Screener
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Old 02-13-2016, 11:40 AM   #9
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Quote:
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Check out annuities
Ha Ha I have enough of that type of income already.
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Old 02-13-2016, 08:29 PM   #10
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I have EIM, EVN, NMZ --- bought them a couple of months ago when they were cheaper.
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Old 02-13-2016, 09:48 PM   #11
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The Meredith episode in 2013 was a great time to buy. Many muni CEFs were trading at >5% discount then. Now, these are mostly trading at premiums and not a good time to buy.
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Old 02-14-2016, 06:02 AM   #12
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Quote:
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Ha Ha I have enough of that type of income already.
CEFs have an equity like risk profile without the upside growth potential. Your emphasis on annuities hints at risk aversion, so why would you invest in a CEF?
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Old 02-15-2016, 08:54 AM   #13
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CEFs have an equity like risk profile without the upside growth potential. Your emphasis on annuities hints at risk aversion, so why would you invest in a CEF?
Now that I have my income needs met with things like annuities I can take on more risk. I'm doing a reverse glide path and see my income increasing in the years to come so I thought I'd look at munis and ended up with these CEFs as I don't much mind about risky stuff, doubly so if it's tax free too.
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CEF Munis
Old 03-04-2016, 12:27 AM   #14
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CEF Munis

One of my best investments over the last 2.5 years was muni CEFs; both are up 28.5 and 29.5%, so I owe Meredith a nice thankyou card.
Both were bought at high discounts to NAF, much higher than their average discount had been, and 2/3 of the gain was their moving back towards the average discount; the rest is yield.
I echo the comment above, to look at CEF connect for discounts, average discount, UNII and Return of cost, as well as leverage and average bond rating.
Most are moving more towards average discounts but there probably are some at a discount.
I'm taking a look at high yield, given the movements in that market in January and before, but they are more like small cap stocks in a risk profile (particularly energy bonds).


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The Meredith episode in 2013 was a great time to buy. Many muni CEFs were trading at >5% discount then. Now, these are mostly trading at premiums and not a good time to buy.
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