Edmond, Marty doesn't run the fund. He tried running funds and it was a disaster. He was humble and bright enough to bring in average money managers to run the funds he fronts while he sticks to the big picture stuff.
The performance has been lackluster forever with a counter-trend recent year or two. The recent good performance has ALL been the discount turning into a premium. NAV performance has been blah. The managers are alive, but part of the reason for stinko performance is due to the high payout. Since the fund doesn't earn that kind of yield, they are forced to meet it by paying first, taxable capital gains and second, return of capital. I don't mind return of capital in an income fund so much, but in a fund that also has a growth component, it is deadly. If you know the story of dollar cost averaging, where your dollar cost is always less than the average price you pay, this works in the opposite manner. And to pay a premium for it compounds the huge risk.
The reason for the premium is the high payout. As I mentioned to many mutual fund cos., the world will always pay up for what they think is "yield." But the fund cos. don't really get marketing. They get the 9 boxes of Morningstar. Marty gets marketing.
It is better than the regular Zweig Fund. But, compared to other well-managed CEFs, such as all the Royce funds, CET, GAM, and the Gabelli Funds, it is not in the game. Even more conservative, nearly all the convertible CEFs beat ZTR like a drum. Not that I'm recommending them right now. And even stodgy TY has beaten them over 5 and 10 year periods.
JMO, but premiums make be shake like Mr. Chicken in the haunted house. <g> |
