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Strategies & Market Trends : Young and Older Folk Portfolio
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To: chowder who wrote (1454)2/5/2023 8:58:16 PM
From: Charliebrown7211  Read Replies (1) of 21804
 
Chowder,

I always appreciate seeing the OFP updates as I am an Old Folk myself! Thank you.

I have a question concerning your CEF holdings. A year or so ago, you mentioned reducing your exposure to leveraged CEFs due to the expected rise in interest rates, of which we all know have occurred. There seems to be an expectation that rates will continue to rise throughout 2023, although at a slower pace, until the Fed believes they have inflation under control. Indications are a target of around 5.0% to 5.25% (but who actually knows for sure).

At what point would you start to nibble at a bond centric CEF? There might be another half point or three quarter point rise in the rates, but would that have a significant detrimental effect on bond CEFs? I would expect their value to drop slightly as new bonds with higher interest rates are issued, but rise in value relatively quickly as old, lower interest bonds are replaced with higher interest ones. Would you wait on purchasing leveraged CEFs until the Feds actually hold interest rates steady? At that point start buying them again anticipating eventual Fed rate cuts?

I have a few utility CEFs (UTG, UTF, BUI), but would like to venture further afield with a few more higher yielding instruments.

Thanks again for all the updates.
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