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Closed End Muni Funds....what do you think
02-12-2016, 07:35 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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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.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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02-12-2016, 07:43 AM
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#2
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Recycles dryer sheets
Join Date: Jun 2014
Posts: 193
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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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02-12-2016, 08:43 AM
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#3
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Full time employment: Posting here.
Join Date: Mar 2010
Posts: 889
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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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02-12-2016, 05:03 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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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.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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02-12-2016, 05:30 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Posts: 3,088
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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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02-12-2016, 06:59 PM
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#6
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Recycles dryer sheets
Join Date: Sep 2007
Posts: 464
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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.
Sent from my iPad using Early Retirement Forum
Mp
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02-12-2016, 07:54 PM
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#7
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gone traveling
Join Date: Jun 2015
Location: seattle/dahlonega
Posts: 77
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Check out annuities
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02-12-2016, 07:55 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Jul 2012
Location: Mississippi
Posts: 1,894
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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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02-13-2016, 10:40 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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 Quote:
Originally Posted by hurricane harry
Check out annuities
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Ha Ha  I have enough of that type of income already.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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02-13-2016, 07:29 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Posts: 1,972
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I have EIM, EVN, NMZ --- bought them a couple of months ago when they were cheaper.
__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
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02-13-2016, 08:48 PM
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#11
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Recycles dryer sheets
Join Date: Jun 2014
Posts: 193
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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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02-14-2016, 05:02 AM
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#12
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,726
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Quote:
Originally Posted by nun
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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02-15-2016, 07:54 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by MichaelB
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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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.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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03-03-2016, 11:27 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Oct 2012
Location: Reno
Posts: 1,338
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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).
Quote:
Originally Posted by catotx
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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