Q: Jeffry Gundlach, on Closing Bell ( MSNBC) after J Powell’s press conference, talked about how easy it is to get 7-8% yields and even as high as 12-13% with very little risk.
More specifically he cited closed end funds trading at 50-60 cents on the dollar.
Would you please provide a few examples of what I could buy.
Do you also agree that the risk is very low.
Thanks
More specifically he cited closed end funds trading at 50-60 cents on the dollar.
Would you please provide a few examples of what I could buy.
Do you also agree that the risk is very low.
Thanks
5i Research Answer:
We would never look at a 12% yield as 'easy' when risk-free rates are much lower. There are closed end funds that have had discounts for decades. Discounts can get larger at times. The discounts can provide a bit of a downside cushion, but most closed end funds are weak traders, and many do not even offer dividends while one waits for a smaller discount. It is not an easy way to make money, in our view. CGI has a 34% discount and would be our favourite in the group. Many Canadian funds have been privatized, closed, or sold. Inthe US, EVT has a 9% discount; NAC is 14%; NVG at 12%; ETW at 12% also.