Fund News From Barron's, 1/2/23

yogibearbull

LINK1

COVER STORY, ”The Best INCOME Ideas for 2023”. (I have arranged the orders as OEFs, ETFs, CEFs, individual securities)

Energy Pipelines: AMLP, NTG, EPD, ET, KMI, WMB
US Dividend Stocks: SCHD, NOBL, VYM, KBWB, C, INTC, JPM, PNC, USB
Foreign Dividend Stocks: IDV, SCHY
Real Estate: VNQ, RQI
Convertibles: MCIFX, CWB, AVK, busted convertibles
HY: HYG, HYT, JQC
Munis: PHMIX, VWITX, NEA
Preferreds: PFF, PFFR, JPM-M, T-C, WFC-Z, REITs-preferreds
Telecom: T, TMUS, VZ
Cash Alternatives: VMFXX, VUBFX, BIL, SHV, 3-mo T-Bills, T-Bill ladders
Treasuries: SHY, TLT, STIP, TIP
Utilities: XLU, UTG, DUK, ED, NEE, SO, XEL

UP AND DOWN WALL STREET. The Fed RATE hikes and yearend tax-loss harvesting (TLH) have depressed bond CEFs including the MUNI CEFs. As there isn’t any systemic problem looming in the muni market, these may be good for trade with small amounts: NEA, NAD, BTT, NVG; unleveraged NUV.

LINK2

CRYPTO ice age or not, FIDELITY is pushing ahead with its crypto initiatives (institutional, retirement, retail). It says that it wants to provide its clients with choices. Its digital assets unit has 500+ people and hiring continues. It will offer Bitcoin within its 401k and more cryptos on its regular platform. Lawmakers, the SEC and DOL have been warning firms and investors. Critics point to FOMO; despite an early start, Fido missed the train on ETFs. Fido is counting on first-mover advantage by lending its reputable name in a devasted, washed-out and scandal-ridden industry. It has urged the SEC to approve “physical” crypto ETFs; its own application was rejected by the SEC (like many others), but Fido is moving ahead with ETFs in crypto-related areas (FDIG, etc). It sees its competitors as HOOD, COIN, PAYPL, SQ, etc. Although financial risks are small for Fido, it risks regulatory risks and reputational damage if things go wrong. Other major brokers (SCHW, IBKR) are watching.

FR/BL funds offer attractive yields (SOFR + 400-500 bps spreads; SOFR is a LIBOR alternative) from lower-quality credits. That is a big risk in recession, especially when many such loans are covenant-lite. Beware of (unmanaged) index funds in specialized and illiquid areas. Hybrid PRWCX manager GIROUX has 15% in FR/BL. Also mentioned are OEFs BFRAX, FFRHX, FRFAX, PRFRX, etc and ETFs BLKN, SRLN, etc. By @LewisBraham

Brian DEMAIN of mid-cap growth JDMAX (ER 1.12%; load 5.75%) watches upside/downside capture ratio (U/D CR); discounted cash flows; sustainable growth; GARP. Fund has low turnover due to its longer-term horizon. In 2023, the cost of capital will be higher due to Fed rate hikes; some growth multiples are still too high; inflation should moderate; the economy will slowdown. His current themes include EVs; semis; renewables; sport franchises.

Crash

Great stuff, yogi. Thanks for the work.

carew388

I never realized there were unleveraged CEFs. Thanks for the info !

yogibearbull

@carew388, CEFConnect Screener shows that 51 out of 447 CEFs are unleveraged. So, most are leveraged. Bond CEFs are more highly leveraged than equity/hybrid CEFs.
https://www.cefconnect.com/

hank

Nice summary @Yogibearbull

In the “Broken Record” section … from Elizabeth O’Brien:

“Check-List for a Recession / 4 Steps to Prepare Your Portfolio for a Recession in 2023”

Haven’t we played this one before?

Sven

It is not uncommon the old stories get repeat again. Nevertheless it is useful to remind the readers what they need to prepare in case of recession takes place in 2023. Many still argue the recession will be shallow and short live, and everything will be up afterward. I believe there are too many unknowns ahead of us right now.