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Strategies & Market Trends : Young and Older Folk Portfolio
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To: jritz0 who wrote (21059)10/7/2025 5:22:03 PM
From: Rincon v2.0  Read Replies (2) of 23022
 
Re: Why do you prefer ordinary income to ROC?

That downturn in April affected the entire stock market, not just PDI. It was a good buying opportunity. The premium/discount had no effect on that single fund when the entire market crashed.

I don’t bother with premiums. I’ve seen way too many occasions when SC and others have recommended a fund at a discount that was, a few months earlier, at a premium but with a lower price. They didn’t recommend it at the lower price because of the premium. It may be counterintuitive to some, but I buy at the lower prices. SC can keep the discount, I want the lower price. Basic economics seem to fly out the window when people start talking about CEF premiums. CEFConnect is full of charts showing funds with lower prices when premiums are higher. I’ll buy them everyday. What I pay matters more than the premium or discount. Price is fundamental. Premium is beside the point for my purposes. I buy low. I bought in April.

I don’t care for ROC vs qualified dividends. You’re right about ROC with ordinary dividends/distributions. They get converted to LTCG after 12 months. However, I want to know what I’m receiving when I receive it. Now that I’ve sold PAXS I’ll get a bill for the ROC distributions. Some will be LTCG. Most of my funds return LTCG, qualified dividends, or fully tax free distributions. PDI is an outlier, still a small position, and unique in my portfolio. I don’t own another equity that pays out ordinary income.

EVT is more typical for me. It is a tax advantaged fund paying 0% ROC with an 8% yield. It’s one of Eaton Vance’s unloved funds. I added to it earlier this year, might have been April. Can’t tell you what the premium or discount is, but it’s a better buy today than its stablemates ETG and ETO.
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