PGF. If the PGF yield is higher than the yield on the underlying securities they hold, then PGF would have to be using leverage or options or else they are a Ponzi scheme. (Or all three- -g-. Just joking)
I use ETFConnect to see if a fund employs leverage. I didn't find any evidence of such when I looked at PGF there. I also checked at their website, and I did not see anything about their use of leverage:
invescopowershares.com
Of course I did this before I bought PGF. I concluded that PGF doesn't use leverage. (Possible I'm wrong.)
Now about the monthly PGF distributions: I wonder if some of the distributions are return of capital. That always makes me a little nervous when I consider it, because it's possible that fund management may be giving me my own money back, so reducing the nav, and yet because they include it in distributions, the "yield" looks so much higher. With PGF, I see no evidence that any of the distributions are a return of capital:
invescopowershares.com
The distributions vary of course. As I interpret the description of the fund, it tries to track an index. That index is market cap weighted and the index people rebalance it every month. So it seems that PGF rebalances too. And this may be one more reason that the distributions vary monthly. (Surprised that if there's rebalancing that there's no reported cap gain or cap loss amounts showing up in the distributions.)
To my knowledge there's no one standard or correct way to determine yield. I don't recall how Yahoo calculates it to get 10%. PGF reported the "30-day SEC yield" at 9.46% on June 30. The 8/14 nav is $16.41. The latest div. (Oops I see I missed it: ex-div today. I was looking for the announcement date and never saw it.) is .11242. If I annualize that amount, I get an 8.2% yield off the nav. And 8% seems reasonably closer to the 7% you are figuring Grommit.
---
I had been following along with you guys and buying preferreds earlier. I have for example, the two you mention now. And I'm intending to hold them as well.
I am looking for a way to get a better yield on cash until I find suitable stock investments. I want to take advantage of yields which remain very attractive --- attractive to me anyway, certainly in comparison to the yields I get at my bank or from money market funds at my brokerage sweeps. Or from what brokers charge as margin rates.
I want to take relatively big positions in something I can get in and out of quickly. Something where I can exit all at once and not forgo too much of the distribution. In other words, something with a monthly distribution, not a quarterly one. Because PGF has 34 or so holdings, that reduces business risk compared to if I held a big position in just one specific preferred. I like that. (It doesn't reduce market risk or interest rate risk though of course.) Further, I wouldn't know which specific preferred to pick now if I had to pick one or two. The days of just picking any or all when the yields were so high (and prices low) are over. (as of right now anyway -g-)
The etf fee for PGF is .7%. Worth it to me for the positives I hope I am getting.
Also, fwiw, I'm splitting off chunks of my cash further with adds to bond etf HYG. Same reasons for me as with PGF. |
