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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Boca_PETE who wrote (6233)	8/11/2011 7:07:14 PM
From: marc ultra	1 Recommendation Read Replies (1) \| Respond to of 10065

Pete re "I owned COHEN & STEERS REALTY INCOME FUND for a time a few years ago. While their total monthly dividend amount seemed large, it turned out that about half was a "return of capital" and the remainder was taxed at ordinary rates." The return of capital part doesn't get taxed but I don't think it's a particularly good thing. I see it more in closed end funds where in order to pay their dividend they take it out of assets. Seems to me equivalent to someone who decided to take 4% of their assets in a year in order to generate enough cash flow. I've taken a good look at FRIFX to see what the risks might be under extreme deteriorating circumstances so I'm looking at 2007 and 2008. Since we had the real estate collapse then with the mega-bear it's hard for me to see things coming close to that even with a new bear. I'll also compare FRIFX with CSRSX: 2007 CSRSX was down 19% and then down 34% in 2008 2007 FRIFX was down 6% and then down 31% in 2008. I think more important is their current holdings. CSRSX is essentially 100% publicly traded REITS so it should have a lot of stock market volatility. FRIFX in is about 67% in bonds, 7% cash and about 34% publicly traded REITS. I believe the manager made a big allocation into CMBS (commercial mortgage backed securities so it has that good 4.5% yield and really is a bond fund and a reasonable replacement for another bond fund like an FFRHX or whatever. Also in terms of performance FFRHX is in the top 5 percentile for the real estate category for YTD, 3 and 5 year performance. So it' got some risk and I've seen some article questioning how good CMBS is at the moment but I don't see anything else I like at Fidelity where that cash from FFRHX is currently sitting so I may put a chunk in there. Right now with Treasuries, CD's and high quality short term bond funds paying nothing people are going to be searching for alternatives If I have to pick something at Fidelity this looks the most interesting to me. It didn't get hurt badly on the recent big down days and with the sell-off it's now flat YTD. CSRSX by comparison is down 5%. Also from what I've seen while I'm not sure,I don't think FRIFX would have major interest rate risk.