twaddle
Thinks s/he gets paid by the post
- Joined
- Jun 16, 2006
- Messages
- 1,703
As I mentioned in another thread, I had been buying muni CEFs. The discount has narrowed considerably since I last bought, so I'm looking for some other options.
The last chunk I bought were unleveraged, but now I like the idea of a leveraged fund. The discounts are bigger, and the cost of the leverage should be dropping.
Do I have this right? The funds borrow short-term in an auction. Over the last year, their average cost was about 3.6%, and the most recent auctions brought that cost down to 2.5%. So, the juice should increase as the spread increases on their long-term holdings, right?
Looking at previous periods when the fed eased, these leveraged funds outperfomed their non-leveraged equivalents by a good margin.
No brainer?
The last chunk I bought were unleveraged, but now I like the idea of a leveraged fund. The discounts are bigger, and the cost of the leverage should be dropping.
Do I have this right? The funds borrow short-term in an auction. Over the last year, their average cost was about 3.6%, and the most recent auctions brought that cost down to 2.5%. So, the juice should increase as the spread increases on their long-term holdings, right?
Looking at previous periods when the fed eased, these leveraged funds outperfomed their non-leveraged equivalents by a good margin.
No brainer?