. Thanks Everyone. It’s my impression I came out ahead. As
@msf noted, there is no tax consideration being in a Roth IRA. Maybe a better way to look at it is I own more shares of the same CEF now for no additional cost (as I reinvested roughly the earlier cash value).
This might make a worthwhile thread on CEFs if anyone is so inclined. I’ve for several years owned 1 or 2. I view these as a way of broadening out / diversifying a portfolio. Also, as a way of adding a little extra “octane” to total return because most employ leverage.
The way they trade drives me nuts. As
@BaluBalu pointed out in another thread they are used by some as trading vehicles. And as
@Mark mentioned in another thread they are largely owned by institutions. The latter fact would seem to indicate that smaller investors have a better than average chance of getting burned by these. If you think interest rates will fall, they should rise in value to the extent that they employ leverage (and falling rates = lower borrowing costs).
What are the incentives for the manager to perform well or to stick to the fund’s mandate? I’ve read that their fee is based on total amount including levered amount. OK. Mutual fund managers have an incentive to attract more investors and sell more shares and increase the funds’ AUM. But a CEF cannot issue more shares. What incentives keep the manager on the straight and narrow?
I do understand that these often trade at a discount to NAV. Is the manager’s fee based on NAV or share price? Does each have a board of directors elected by shareholders? I think so.
Why is it that the share price of so many of these drop rapidly in the first year or 2 of operation? Often they will fall 1
5-2
5% in the first year or two and then begin a slow recovery. Obviously, they don’t look like a good value when first issued. Is that just raw luck or is some other factor at work?
Vanguard PRIMECAP Reopens FCNTX is no S&P clone. It rose about 15% in January alone. I’ve owned it for 20+ years and it’s the best performing fund in my portfolio.
Vanguard PRIMECAP Reopens Sure makes sense…. I’ve also got a lot invested in SPY too. It’s certainly been the place you wanted to be the last 15 years
Vanguard PRIMECAP Reopens @MikeW - I haven't looked closely lately. At the time I sold FCNTX I considered the retirement of Tillinghast at FLPSX, who I thought Fidelity might have to pry his cold dead hands off the keyboard, and wondered how much longer Danoff would stick around. I was, and still am, trying to consolidate my portfolios into something easy enough for my kids to take over and deal with. Booking it into the S&P
500 seemed like an easy and prudent move. That's all.
TestFol.io - Free Portfolio Analytics have unable to get any response from elmwealth on tool input details. but one may infer something interesting if true :
a. their optimal asset allocation models imply only 5 variables matter. and none of them lead to <40% equity allocation.
b. the withdrawal rate tool has ~20 variables...many of the usual suspects.
plan on comparing allocation output to morningstar, vanguard.
Fidelity Rewards Signature Card? msf stated:
Somewhere around 2015 Fidelity switched from MasterCard to Visa.
musical chairs....CapitalOne is forcing users from an early expiring Visa to Mastercard.
Cap1's highly marketed user changes\benefits? "New Card Number"
hidden bonus: users gifted ~1 month to manually remove and replace all their billpays and visa linked subscriptions.
Current CDs are Compelling It's true that there are only a handful of offerings right now, but I just took a quick and arbitrary look at 3 years out and there are eight between 4.7 and 4.8
5%. I might do a Morgan Stanley in those, because how much longer will Moneymarket SUTXX be paying
5.18%?
Add: In Treasuries, 7 offerings
@4.
55% maturing 1/27. Another possibility.
. Well, if this was a stock and you shorted it 15 days ago, and covered now with purchase, you would have that profit.
But with mutual fund, after sale, you had no exposure. With the purchase, a new gain/loss clock starts.
. 1, 000 shares X $11.98 = $11,980 Received from sale 1
5 days ago.
1,000 shares X $11.69 = $11,690 Paid for same number of shares.
So per
1000 hypothetical shares traded the “gain” should be $290. No?
But that doesn’t take into account the lost dividend. 1,000 X $0.0870 = $87 (I think)
So … on 1,000 shares looks like a real gain of $203 if I’m doing this right.
No tax implications. It’s in a Roth IRA. To be honest, I lost about an equal amount while the money was in a different CEF. Not trying to blow my own horn … just figure this out. (The actual amount was somewhat higher than the hypothetical
1,000 shares.)
Thanks @yogibearbull for the assist. You pushed me in the direction of figuring this out, unless there’s something else I may have overlooked!
. You sold for $11,980 15 days ago. What was the purchase price of THAT (& any distributions)?
Now, you have bought again for $11,690. Your gain/loss will be determined when you sell THIS lot?
. I’m hesitant to delete this even though my question has been expertly addressed by the good folks here. Possibly, someone has more to add ….
@Ted sometimes used a black dot to throw a thread into a semi-conscious state.
Thanks for the help.
-
I sold a CEF 1
5 days ago for $11.98 p/s
I bought it back today for $11.69 p/s - 29-cents a share cheaper.
Seemed like a good deal.
But I missed out on a (pretty standard) monthly dividend of $0.0870 per share by being out of it.
Let’s assume no fees paid.
Did I gain anything? Let’s use a
hypothetical 1,000 shares for illustrative purpose.
Thanks for any assistance to this decidedly math-challenged investor. :)
PS - I tried to do a simple multi-figure subtraction problem the other day on paper as first learned in 8th or 9th grade. Couldn’t do it. Gave up. Damn calculators!
