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Strategies & Market Trends : Bonds & Bond Funds
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From: peter michaelson12/16/2008 3:18:45 PM
2 Recommendations   of 161
 
Message 25255515

To: peter michaelson who wrote (70123) 12/15/2008 8:58:00 PM
From: KyrosL of 70171

My CEF portfolio changes frequently as opportunities arise to exchange one, whose price has risen too much, for another, whose price has fallen too much. CEFs are illiquid and there are frequently large price moves on relatively little volume. I follow a bunch of them during the trading day and try to take advantage of inefficiencies. So rather than give you specific CEFs, I will list the criteria I use to select them:

1. large discount to NAV (preferably above 10%). If this discount is higher than the historical average, it's a plus.

2. Good quality. Preferably not more than 10% or so in BBB and below bonds.

3. Low expenses. Expenses around 1% or lower and never more than 1.5%.

4. Relatively large net assets -- more than 500 million or so. This makes trading the CEF easier and lowers the chance of increased future expenses.

5. Yield.

Additional CRITERIA that are more tie breakers:

1. Low duration. The lower the duration, the lower the sensitivity to interest rate changes.

2. The mix among AAA, AA, A bonds. The higher the quality the better.

3. Leverage -- the lower the better, other things being more or less equal.

The sites I use to rank and select the CEFs are:

cefa.com

etfconnect.com
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