Hello Jurgis,
<if I could find a closed-end fund that paid 6-8% for me to wait for a correction (and then not fall with the correction), I would put a good percentage of my portfolio into that and just wait. But, I'm not sure if such an investment exists.
No, it doesn't. But if someone finds it, please let me know. :)>
Well, I didn't find exactly what we're looking for, but I've been adding a small amount to ETJ as it's close. Basically, ETJ is a closed-end fund that owns equities, owns a lot of put options on the indexes out 3 months or so, sells calls against the indexes and also does some selling of puts of individual stocks to accumulate new positions it seems. Anyways, they haven't done well from a stock perspective at all the last year (and I didn't start buying until the last few weeks). Their NAV performance was been pretty even at (0.48%) in 2010, 5.68% in 2009, (1.17%) in 2008, and 7.38% in part of 2007 when it looks like the cef started.
So, I guess my play here is that the premium/discount has gone from a premium of over 6% to a discount that is now around 13% which seems to be the historical discount low. So, what I'm trying to do is to put some money that I would normally put into a yield instrument and put it into ETJ with the view that maybe the managers can eak out a few NAV % this year and/or the discount will revert to a historical mean from a historical low. I don't expect this to do anything seriously up this year, but I think it's a decent defensive play for a decent yield in comparison to treasury/preferred yields on a risk/reward basis. The risk here is that the discount continues its plumment, which is possible.
Just thought I'd throw it out there based on our conversation and I do think any closed-end selling at a greater than 10% discount is a value to consider. There are other Eaton Vance cef's that I'm analyzing, but this one is different than the others.
Thanks,
Grant |
