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#5
05-31-2004, 06:50 PM
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 Re: How a closed end fund can give such high interest Rate? "HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote in message news:7nsgb0do1mg17rp3bb021t7k13i2sgrbu8[at]4ax.com... - quote - > On Wed, 26 May 2004 13:40:59 CST, "Ed" <friday[at]fishinthe.net> wrote:
Skip,> > Don't forget return of capital. Many funds will pay fixed 'dividends' even > > if part of the money is ROC. > > They claim a high yield but it's just your own money coming back to you. > > When you get ROC you must adjust your cost basis. > Other than reading the prospectus, how would an investor know that the > yield contained ROC? > (I am intrigued by this since I recently encountered a "cash fund" run > by a local manager who was touting a "tax-free" yield of 5%. Since > assuming reasonable risk I know of no tax-free short-term bonds at 5%, > I am trying to figure out how he does it.) Why are you assuming reasonable risk? Maybe suitable risk. Look at the prospectus of the fund and you will either see leverage or NR or lower quality longer term bonds. Jimmy - quote - > -HW "Skip" Weldon > Columbia, SC |
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#4
05-31-2004, 02:24 PM
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| Re: How a closed end fund can give such high interest Rate? "HW \"Skip\" Weldon" <skip5700removethis[at]hotmail.com> wrote in message news:<7nsgb0do1mg17rp3bb021t7k13i2sgrbu8[at]4ax.com> ... - quote - > (I am intrigued by this since I recently encountered a "cash fund" run
I am holding an exchange traded muni fund selling at about 7% discount> by a local manager who was touting a "tax-free" yield of 5%. Since > assuming reasonable risk I know of no tax-free short-term bonds at 5%, > I am trying to figure out how he does it.) > -HW "Skip" Weldon > Columbia, SC to NAV and paying about 7% tax free. It is leveraged. Frank |
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#3
05-29-2004, 11:36 AM
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| Re: How a closed end fund can give such high interest Rate? On Wed, 26 May 2004 13:40:59 CST, "Ed" <friday[at]fishinthe.net> wrote: - quote - > Don't forget return of capital. Many funds will pay fixed 'dividends' even
Other than reading the prospectus, how would an investor know that the> if part of the money is ROC. > They claim a high yield but it's just your own money coming back to you. > When you get ROC you must adjust your cost basis. yield contained ROC? (I am intrigued by this since I recently encountered a "cash fund" run by a local manager who was touting a "tax-free" yield of 5%. Since assuming reasonable risk I know of no tax-free short-term bonds at 5%, I am trying to figure out how he does it.) -HW "Skip" Weldon Columbia, SC |
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#2
05-26-2004, 07:40 PM
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| Re: How a closed end fund can give such high interest Rate? "TT" <tool[at]box.net> wrote in message news:RoGdnbAxU5HEaKjdRVn-hg[at]comcast.com... - quote - > I didn't research this particular fund but, in general, many closed-end
Don't forget return of capital. Many funds will pay fixed 'dividends' evenbond > funds can use leverage. They can borrow money to buy more bonds thereby > increasing the yield. This obviously adds to the risk of the fund. I'm not > sure if this fund is particular is using that strategy. > Also, closed-end funds can trade at a market price that is independent of > the Net Asset Value (NAV) of the fund itself, higher or lower. Many times > they trade at a discount. A bond fund trading at a discount will have a > higher reported yield. Remember, yield is not exactly what the fund is > paying out in interest payments, it is only the it is what the payments are > worth at the current price and can fluctuate daily. if part of the money is ROC. They claim a high yield but it's just your own money coming back to you. When you get ROC you must adjust your cost basis. |
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#1
02-20-2004, 05:47 PM
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| Re: How a closed end fund can give such high interest Rate? arouth[at]radiology.umsmed.edu (zxcvar) wrote in message news:<f0e5a6c.0402192123.7eccbb6b[at]posting.google.com> ... - quote - > Greetings! I am looking at the information in internet of Nuveen
They seem to lever up by issuing preferred stock (just another> Municipal Market Opportunity Fund [Ticker Name - NMO]. The current > divident yield [on share price] is 6.55% tax free which is taxable > equivalent of 9.35%. Average Weighted Maturity [years]- 20.50 years. > Average duration in years -5.83 years. How can Nuveen pay such high > interest rate? What is the catch. With thanks. liability). The problem with this is that issue short term preferred stock and use this money to long term bonds. The risky situation is that if interest rates go up the value of the long term bonds will drop while their short term obligations stay the same. A little risky. This is where you get compensated by the higher return. Beto Lanuza http://www.stockmarketplaza.com/ |
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02-20-2004, 11:44 AM
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| Re: How a closed end fund can give such high interest Rate? I didn't research this particular fund but, in general, many closed-end bond funds can use leverage. They can borrow money to buy more bonds thereby increasing the yield. This obviously adds to the risk of the fund. I'm not sure if this fund is particular is using that strategy. Also, closed-end funds can trade at a market price that is independent of the Net Asset Value (NAV) of the fund itself, higher or lower. Many times they trade at a discount. A bond fund trading at a discount will have a higher reported yield. Remember, yield is not exactly what the fund is paying out in interest payments, it is only the it is what the payments are worth at the current price and can fluctuate daily. "zxcvar" <arouth[at]radiology.umsmed.edu> wrote in message news:f0e5a6c.0402192123.7eccbb6b[at]posting.google.com... - quote - > Greetings! I am looking at the information in internet of Nuveen > Municipal Market Opportunity Fund [Ticker Name - NMO]. The current > divident yield [on share price] is 6.55% tax free which is taxable > equivalent of 9.35%. Average Weighted Maturity [years]- 20.50 years. > Average duration in years -5.83 years. How can Nuveen pay such high > interest rate? What is the catch. With thanks. |
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#-1
02-20-2004, 09:00 AM
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| How a closed end fund can give such high interest Rate? Greetings! I am looking at the information in internet of Nuveen Municipal Market Opportunity Fund [Ticker Name - NMO]. The current divident yield [on share price] is 6.55% tax free which is taxable equivalent of 9.35%. Average Weighted Maturity [years]- 20.50 years. Average duration in years -5.83 years. How can Nuveen pay such high interest rate? What is the catch. With thanks. |
| Tags |
| closed, end, fund, give, high, interest, rate |
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