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Strategies & Market Trends : Young and Older Folk Portfolio
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To: mancat who wrote (11418)11/17/2024 11:07:01 AM
From: jritz01 Recommendation

Recommended By
Menominee

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RE: Are there reasons to favor a CEF over an ETF or vice versa? Example, JEPI or ETV, both covered call instruments, both highly rated and found referenced regularly on this blog.

Short answer; yes. I hold both in tax advantaged accounts, however, I would prefer ETV in a taxable account.
I believe Chowder mentioned the managed distributions, I don't care too much about that. If you look back at ETV, they used to trade at steep premium until they had to cut that managed distribution and folks bailed causing ETV to trade at a discount which has narrowed but still trades at a discount.
ETV is a very defensive fund, it overwrites 94% of the portfolio but still has managed a good return this year. Eaton Vance shines in the option CEF space and I hold plenty of their funds. JEPI and JEPQ return a lot of ordinary income and should be held in a taxable account.

I like CEFs for cashflow where there are not equity option EFTs in specific sectors like health care and finance. I also like CEFs for sectors like real estate and utilities where they can goose the distributions by either leverage or options.

I have swung to more ETFs than CEFs in the last few years but I see myself always holding some CEFs.
CEFs can also add alpha when normally well-run funds fall out of favor because of their sector or after a distribution cut and the fund swings to a discount.
I also prefer ETFs because it is easy to see if they are earning their nav because ETFs will always trade around nav.
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