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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: re3 who wrote (59485)	5/16/1999 1:43:00 PM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Howard, It is the same in the US. Bond trades are reported net. Of course, you can buy directly from the Treasury on new issues, but that is one reason the yields are so much lower on the new issues. CEF=Closed End Fund. These are mutual funds that trade on exchanges, so they often sell at discounts or premiums to their net asset values. GAB=The Gabelli Equity Trust. RQL=The Royce Focus Trust. Both of these are pretty good investment cos. However, the - after their symbols indicates a preferred issue. Here is how that works. The fund wants to use leverage, so they issue preferred shares of up to 1/3 the assets of the trust. These shares receive a dividend, most of which is long term capital gains. At this time, the set rate is yielding 7.7% for RGL- and 7% for GAB-. The preferreds have anywhere from 400% to 600% of the stock assets protecting their value and the funds have to redeem them if the coverage sinks below 250%. That is pretty safe. And they are allowed to redeem them in dates ranging from 2002 to 2005. On the down side, the fund never has to redeem them if it does not suit them, though preferred holders elect 25% of the board, who will be arguing their case. There are several things to like here: 1. Higher yield than high quality bonds. 2. The yield is primarily long term cap gains, which gets you a tax break. 3. AAA rating and they are really better than AAA. 4. Value portfolios backing assets. If someone just wants a high payout with no trading for 4-6 years, these things are pretty attractive. For a trader, they are pretty dull.