just another Fido Forum refugee .....

[surprising]

@surprising
A bunch from Fidelity have moved here. , Recent post has Fidelity refugee #17 , apparently many are very strong advocates of debt cefs. They have left their Fidelity forum-which was evidently redesigned and messed up- and landed here, some coalescing and now a new CEF sticky thread. Welcome. I like some cefs too, happy to see the sticky thread. My first cef was PCN decade or so ago. Question for you, "Surprising". Will use PDI as example which I own. Will try adding snippet at end.

As can see its price and nav fell off cliff in March 2020 and after slight recovey again in June 2021. Latter before Fed started aggressively raising rates in March 2022 but perhaps investors anticipating. So did you get crushed during this period or trade in and out? I like it now and overall fat dividends throughout but wondering how perhaps a long term objective investor of these vehicles dealt with them? Oh and also what percentage of your total portfolio are debt cefs? Thanks for any feedback you may offer. I like owning for now but worry about the next cliff.

View attachment 54883

With low share count and mostly individual investors, CEFs can get crushed during panic selloffs. During covid all of my CEFs dropped a lot. At the time I was still working so I just kept adding, and now I am collecting about 10% yield on cost and also have significant share price gains. However, it was a great test because, even though the price was dropping significantly, not a single CEF I owned reduced their distribution. Gave me the confidence that this strategy can work and provide stable income in good times and bad.
I own 3 CEFs (AWF, PDO, and DLY) that make up 60% of my dividend oriented bucket. They are all fixed income oriented. I think with interest rates peaked and coming down, all these fixed income funds are going to do well.
The one negative for me, and it's a big one, is that all these are in my taxable brokerage account, and most of the distributions are taxed as ordinary income, so not very tax efficient. The other stocks in my dividend bucket are a BDC (HTGC) and a REIT (RITM). Both of these also are taxed as ordinary income. I have a similar portfolio in my roth-401k that will continue to DRIP and grow for the next 8 years and should provide nearly $8K/month in income once I can tap it at 59.5.

 

[Tacitus]

@surprising

Thank you for your reply. That is why liked PCN, its distribution history so consistent and over so long a period. So have to admit I trimmed holdings of CEFs a bit during the second cliff drop. I will delve into your other selections. What I truly wish to avoid is a wasting asset which in absolute terms will inevitably decrease its dividend too though yield may remain high due to market price declines. Not someone who trades frequently based on a price chart. And fundamentals hard to predict (though Powell at one point made it clear will continue raising rates, nice that is over with). Yield on cost great metric, use to use in picking dividend stocks. Again appreciate your perspective as an investor in these. Yeah very tax inefficient unless significant ROCs but those are of course worrrisome to have too much of.

 

[Flieger]

With low share count and mostly individual investors, CEFs can get crushed during panic selloffs. During covid all of my CEFs dropped a lot. At the time I was still working so I just kept adding, and now I am collecting about 10% yield on cost and also have significant share price gains. However, it was a great test because, even though the price was dropping significantly, not a single CEF I owned reduced their distribution. Gave me the confidence that this strategy can work and provide stable income in good times and bad.
I own 3 CEFs (AWF, PDO, and DLY) that make up 60% of my dividend oriented bucket. They are all fixed income oriented. I think with interest rates peaked and coming down, all these fixed income funds are going to do well.
The one negative for me, and it's a big one, is that all these are in my taxable brokerage account, and most of the distributions are taxed as ordinary income, so not very tax efficient. The other stocks in my dividend bucket are a BDC (HTGC) and a REIT (RITM). Both of these also are taxed as ordinary income. I have a similar portfolio in my roth-401k that will continue to DRIP and grow for the next 8 years and should provide nearly $8K/month in income once I can tap it at 59.5.

This risk is why I have other investments (than CEF's) and spread across sectors. I try to keep no investment more than 5% of portfolio (other than SPAXX and other short term), and most are much less than that.

Flieger

 

[marget]

Just an observation here, but for a long time I seemed to be one of the very few vocal people who owned CEFs here for income and when I mentioned it, reactions were pretty muted. Now there seems to be a flood of people with CEFs and several threads on income investing with them. What changed? Is the selloff in the market causing people to look for more reliable income? I've noticed my CEF/BDC/REIT portfolio has been pretty stable, if not rising, in this market, so I'm pretty happy I can wait it out with reliable income stream while the market sorts itself out.

We have all abandoned the Fidelity DF because they totally messed up the update of their DF. That DF is a total train wreck. I think Mootsie is the one who found this DF. All credit goes to him.
And, honestly, we all will follow Dick to the moon if necessary

 

[fjpajerski]

DF? Never ever seen that used before. This forum has been well-known to many for quite a while because of its important topic and the wide-range of info and knowledgable posters now in it. But this is what I referred to as "troublesome" and what kept me away until I had no choice ... there's so much enticement here to sit at one's computer and just type/chatter away all day on so many threads. For some, this seems to be their life, so be it. I just saw a thread titled "rock music documentaries" ... had to browse it, and had to (successfully!) fight off the desire to type away on it all afternoon long.

More seriously, a problem here (and maybe just a problem to me) is the lack of poster self-discipline in what they type where ... way too much off-thread material which makes it more difficult to follow the purported topic. Just look at what appearing now in this particular thread, one in a sub-forum supposedly to introduce new members. Half the entries now here instead should be in the active-investing sub-forum (in the income-investing, CEF, or BDC threads there) where they then could benefit even more members.

Hey ... get off my lawn!

--- Frank

 

[aja8888]

DF? Never ever seen that used before. This forum has been well-known to many for quite a while because of its important topic and the wide-range of info and knowledgable posters now in it. But this is what I referred to as "troublesome" and what kept me away until I had no choice ... there's so much enticement here to sit at one's computer and just type/chatter away all day on so many threads. For some, this seems to be their life, so be it. I just saw a thread titled "rock music documentaries" ... had to browse it, and had to (successfully!) fight off the desire to type away on it all afternoon long.

More seriously, a problem here (and maybe just a problem to me) is the lack of poster self-discipline in what they type where ... way too much off-thread material which makes it more difficult to follow the purported topic. Just look at what appearing now in this particular thread, one in a sub-forum supposedly to introduce new members. Half the entries now here instead should be in the active-investing sub-forum (in the income-investing, CEF, or BDC threads there) where they then could benefit even more members.

Hey ... get off my lawn!

--- Frank

Yes, we are pretty good at letting threads drift! Much different than say at Bogleheads.

Some here came from there years ago. We like you folks from Fidelity and as a group, I am sure you can add the "missing link" here (fixed income topics like BDC and CEF securities). Many posters here are buy and hold equity funds and ETF's types.

 

[MichaelB]

DF? Never ever seen that used before. This forum has been well-known to many for quite a while because of its important topic and the wide-range of info and knowledgable posters now in it. But this is what I referred to as "troublesome" and what kept me away until I had no choice ... there's so much enticement here to sit at one's computer and just type/chatter away all day on so many threads. For some, this seems to be their life, so be it. I just saw a thread titled "rock music documentaries" ... had to browse it, and had to (successfully!) fight off the desire to type away on it all afternoon long

 

[REWahoo]

When in Rome...

 

[COcheesehead]

DF? Never ever seen that used before. This forum has been well-known to many for quite a while because of its important topic and the wide-range of info and knowledgable posters now in it. But this is what I referred to as "troublesome" and what kept me away until I had no choice ... there's so much enticement here to sit at one's computer and just type/chatter away all day on so many threads. For some, this seems to be their life, so be it. I just saw a thread titled "rock music documentaries" ... had to browse it, and had to (successfully!) fight off the desire to type away on it all afternoon long.

More seriously, a problem here (and maybe just a problem to me) is the lack of poster self-discipline in what they type where ... way too much off-thread material which makes it more difficult to follow the purported topic. Just look at what appearing now in this particular thread, one in a sub-forum supposedly to introduce new members. Half the entries now here instead should be in the active-investing sub-forum (in the income-investing, CEF, or BDC threads there) where they then could benefit even more members.

Hey ... get off my lawn!

--- Frank

There was thread drift at the old forum too, usually and unfortunately into politics which is a strict no no here.

 

[Koolau]

DF? Never ever seen that used before. This forum has been well-known to many for quite a while because of its important topic and the wide-range of info and knowledgable posters now in it. But this is what I referred to as "troublesome" and what kept me away until I had no choice ... there's so much enticement here to sit at one's computer and just type/chatter away all day on so many threads. For some, this seems to be their life, so be it. I just saw a thread titled "rock music documentaries" ... had to browse it, and had to (successfully!) fight off the desire to type away on it all afternoon long.

More seriously, a problem here (and maybe just a problem to me) is the lack of poster self-discipline in what they type where ... way too much off-thread material which makes it more difficult to follow the purported topic. Just look at what appearing now in this particular thread, one in a sub-forum supposedly to introduce new members. Half the entries now here instead should be in the active-investing sub-forum (in the income-investing, CEF, or BDC threads there) where they then could benefit even more members.

Hey ... get off my lawn!

--- Frank

Nice thing here is that the "Community Forum" titles are pretty accurate. If anyone heads down the wrong path, the mods usually put the thread into the right category. So, if there are a group of topics of no interest, you can ignore that particular forum.

It's true that some of us "live" here (or so it might seem). Also true that we wander off topic and the mods are pretty cool about it until it strays in the wrong direction.

Way different than other Forums, here. That's what I like about it. To each his own and all that or, my favorite: YMMV

 

[leb]

I am an aged retired-in-2004 passive-but-not-yet-comatose income-investor focused on high-yield FI CEFs (IRA-Rollover) and BDCs (IRA-Roth) in a buy-and-monitor non-trading manner. The CEF account priority is a monthly cash distribution (at 11%+ on cost) nicely in excess of normal living expenses. I'm (heresy!) all in on these, sleeping very comfortably (even right now) with a fairly steady income from this and even some growth at times despite their requirements to distribute almost all earnings. Some swings down (such as with CLO equities) don't bother me, especially when they then swing up.

At this stage of life with advancing age and declining health, there's little of personal interests to report here, just much less travel and concerts and dinners and more time around the house reading, watching (good!) movies, and listening to music. And online-chess has replaced the tennis courts for me, too. My forum-interest here is investing in this narrow spectrum which suits me. As I struggle for more time away from the computer and from social media, the wide range of interesting material that I see here (and could spend all day on) is quite troublesome. I don't post often, there's usually someone more informed more quick on this than me as well as that I have no wish to just type something just to chatter away with someone.

Looking back, I was an active equity growth chaser beginning with the Nifty-Fifty and Go-Go funds of the late '60s, and then there were various small funds from various small boutique shops and overall far too much time and worry spent on some gains and some losses in doing all this. It took a while for CapeCod's info on FI investing some years ago in the M* forum to germinate in me, but now I am financially comfortable without expending much time/worry to be so.

And to drone on .... coming from a technical background (data center support and management beginning at NASA-GSFC in 1966), I have received necessary education/help in FI CEF and BDC investing by postings from the esteemed Cape gentleman, and articles from a few SeekingAlpha analysts (primarily ADS Analytics (and its service too), Stanford Chemist, Nick Ackerman, and Steven Bavaria). I also have to note the SA commenter Bekster who offers the most detailed and informative BDC info in a very civil manner.

Here's my lineup: Peculiar to me is that I like having just seven or eight holdings in the account.
FI CEFs ... ARDC, DMO, KIO, OXLC, PAXS, PDO, PFN, WDI
BDCs ... ARCC, BCSF, BXSL, CGBD, FDUS, GBDC, OBDC

--- Frank

Hi Frank!

 

[Karner Blue]

@surprising
A bunch from Fidelity have moved here. , Recent post has Fidelity refugee #17 , apparently many are very strong advocates of debt cefs. They have left their Fidelity forum-which was evidently redesigned and messed up- and landed here, some coalescing and now a new CEF sticky thread. Welcome. I like some cefs too, happy to see the sticky thread. My first cef was PCN decade or so ago. Question for you, "Surprising". Will use PDI as example which I own. Will try adding snippet at end.

As can see its price and nav fell off cliff in March 2020 and after slight recovey again in June 2021. Latter before Fed started aggressively raising rates in March 2022 but perhaps investors anticipating. So did you get crushed during this period or trade in and out? I like it now and overall fat dividends throughout but wondering how perhaps a long term objective investor of these vehicles dealt with them? Oh and also what percentage of your total portfolio are debt cefs? Thanks for any feedback you may offer. I like owning for now but worry about the next cliff.

View attachment 54883

 

[Karner Blue]

Number 18 here : )

 

[eniacpalm]

welcome Karner

 

[Cobra9777]

You need a new avatar.

 

[Out-to-Lunch]

Welcome Karner.

 

[dickoncapecod]

Hi. FWIW, I think the answer is built into the substance of your questions. Yep, I had my worst year in 2022 since retiring. But it wasn't because I sat on my hands and watched my net worth melt --- rather it was because I lost discipline and foolishly tried going long on "down-enough -- great yield" trades and getting washed out. That won't happen again for two reasons: 1) lesson learned and 2) it's unlikely Fed is going to hike rates the most aggressively in three decades again before they plant me.

You exhibit appropriate awareness. I don't WORRY about what might happen in the future --- but I am attentive to markets and watch for possible disruptors. Like: if bird flu goes human-to-human and deadly, don't own CEFs (or stocks) --- or if Fed announces it is undertaking a rapid tightening cycle to address sudden near-double-digit inflation, also don't own CEFs (or stocks). IMO most investment disasters have the same root cause: folks have been convicted that there is something "wrong" with selling holdings, and then for years they post bitter comments on investment websites arguing that there is something wrong with the ASSETS they didn't sell! Corollary: they fail to realize that unrealized losses have the same impact on future portfolio returns as realized losses.

CEFs and stocks and bonds and commodities are not buy-and-hold investments. My holding periods for CEF positions have ranged from about 7 years to five minutes. IMO loss avoidance is a key, and attention and discipline CAN be effective solutions.
Regards, Dick

 

[Fahshah]

I guess I’m #19 moving here from Fidelity. I’ll post my April CEF 2025 here until I find my way around:

CEFs:

XLG: PDI & PDO

LG: DNP, PAXS, WDI, DMO & GOF

Med: BMEZ, BDJ, & PHK

Sm: TYG, OXLC, THW, BCAT, ARDC, RLTY, FTHY & JFR

Starter: CPZ, FSCO, NBXG & ETV


ETFs:

Med: SPYI & SGOV

Sm: PFFA & JEPQ


Munis:

NVG, VKI, NMT & NEA


All together the above is 32.64% of my portfolio and 44.46% of the income the portfolio spins off.

(All largest to smallest)

 

[Gumby]

... IMO loss avoidance is a key, and attention and discipline CAN be effective solutions....

As I recall, that's Warren Buffet's Rule #1. It might be a good company, but if the price is too high, it's not a good investment.

 

[Koolau]

Number 18 here : )

Welcome Karner Blue.

Our forum is quite diverse and we love to hear from all sorts of background and experience levels. Please post often.

 

[marget]

Hi. FWIW, I think the answer is built into the substance of your questions. Yep, I had my worst year in 2022 since retiring. But it wasn't because I sat on my hands and watched my net worth melt --- rather it was because I lost discipline and foolishly tried going long on "down-enough -- great yield" trades and getting washed out. That won't happen again for two reasons: 1) lesson learned and 2) it's unlikely Fed is going to hike rates the most aggressively in three decades again before they plant me.

You exhibit appropriate awareness. I don't WORRY about what might happen in the future --- but I am attentive to markets and watch for possible disruptors. Like: if bird flu goes human-to-human and deadly, don't own CEFs (or stocks) --- or if Fed announces it is undertaking a rapid tightening cycle to address sudden near-double-digit inflation, also don't own CEFs (or stocks). IMO most investment disasters have the same root cause: folks have been convicted that there is something "wrong" with selling holdings, and then for years they post bitter comments on investment websites arguing that there is something wrong with the ASSETS they didn't sell! Corollary: they fail to realize that unrealized losses have the same impact on future portfolio returns as realized losses.

CEFs and stocks and bonds and commodities are not buy-and-hold investments. My holding periods for CEF positions have ranged from about 7 years to five minutes. IMO loss avoidance is a key, and attention and discipline CAN be effective solutions.
Regards, Dick

I always feel solid when you write such clear directions for investing. Thanks a lot.
I think I may have some PTSD from 2008, 2022 and a couple other times.

 

[GBcycling]

I guess I’m #19 moving here from Fidelity. I’ll post my April CEF 2025 here until I find my way around:

CEFs:

XLG: PDI & PDO

LG: DNP, PAXS, WDI, DMO & GOF

Med: BMEZ, BDJ, & PHK

Sm: TYG, OXLC, THW, BCAT, ARDC, RLTY, FTHY & JFR

Starter: CPZ, FSCO, NBXG & ETV


ETFs:

Med: SPYI & SGOV

Sm: PFFA & JEPQ


Munis:

NVG, VKI, NMT & NEA


All together the above is 32.64% of my portfolio and 44.46% of the income the portfolio spins off.

(All largest to smallest)

Welcome fahshah,

gb from FF

 

[HappilyRetired]

Mootsie from the old Fidelity board here. Welcome!

Hi Mootsie, ForeverRetired here from FID as well...... I like your new name!

 

[COcheesehead]

Hi Mootsie, ForeverRetired here from FID as well...... I like your new name!

It’s actually my original name. I have been on here since 2016.

 

[MarieIG]

Welcome to the forum. There is no mandatory posting requirement. Best wishes - and enjoy your time here.