Wall Street’s Even Dirtier Little Secret

As of Close of Business May 8th, no less than 57 multi-year experienced, Taxable Income, Closed End Funds (CEFs) were paying 7% or more in 401k and IRA eligible income to their shareholders.

31 issues (54%) paid 8% or above, and the average for the Heinz-like group was 8.56%. All of these portfolios are professionally managed by this long list of well respected, long experienced, investment companies… their purpose is dependable income production.

Blackrock, Nuveen, Pimco, Putnam, Invesco, Alliance-Bernstein, MFS, Calamos, Eaton Vance, Deutsche, Pioneer, Western Asset Management, Wells Fargo, Flaherty & Crumrine, 1st Trust, Brookfield, John Hancock, KKR, Babson Capital, Allianz Global, Neuberger-Berman, & Cohen & Steers

The investment portfolios include all forms of Bonds, Preferred Stocks, Mortgages, Senior Loans, etc, domestic and global, high yield and normal…

How difficult could it be to put together a well diversified, retirement income portfolio? If you only knew…

Most of these funds have paid steady, dependable, income for more than fifteen years, even through the financial crisis… several have been around since the ’90s

Yet your financial advisor has probably never mentioned them to you as a viable alternative to low yielding income Mutual Funds or stock market dependant funds and ETFs… she probably isn’t familiar with them either.

The DOL (and other retirement plan “specialists”) have effectively banned these programs from 401k Plans, and it’s likely that you have never heard them advertised or even mentioned in the most popular financial newsletters…

One could conclude that Wall Street (even the CEF providers themselves) would prefer that you didn’t even know that they exist.

Now here’s “the rest of the story”: 

A May 15th data search at cefconnect.com reveals that nearly 90% of all Taxable/Tax Deferred Closed End Funds (CEFs) were selling below their net asset values (NAVs), and of those, 63% were available to all (yes, IRA and 401k investors, too) at discounts above 8%.

Income Mutual Funds (I believe) are never available at discounts from NAV, and how many discounted securities has your advisor suggested to you since 2012 or earlier? ETF prices, I understand, are manipulated by their creators to present within pennies of their NAV.

But tax-deferred/taxable CEFs historically sell at discounts as often as not, and this morning, nearly 62% of them were available to MCIM taxable, IRA, and self-directed 401k account investors at discounts of 7% and higher.

SO, WHY THE WALL STREET COVER-UP? 

And, why aren’t you asking for more information?