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re: OT- Cooking the Books
Posted on 8/8/16 at 8:41 pm to SquatchDawg
Posted on 8/8/16 at 8:41 pm to SquatchDawg
As far as CEF's go, Voya's NRF is actually a very good one. They have zero leverage (no capital loans/money borrowed), which is rare, and a really big deal. It means there's no ancillary internal interest rate risk.
The only problem I see with it is the fact it's NAV has consistently under-performed it's share price. And this goes back to the 85% of distribution being ROC rather than P/E margins and internal gains. It signals that the distribution that high can't last. They are inflating it to make the fund look more attractive to new buyers. Once all the shares sell, the NAV will readjust and the distribution will slowly come down and level off. How much I don't know.
Also, oil and gas are way below price norms right now too. So once the oil companies in the portfolio start making better margins, the fund will get a nice boost and will likely reduce the ROC percentage, which is good.
The purpose of these is for both growth and income. They sacrifice ease of liquidity and are susceptible to big volatility to generate high distribution rates. They are best if started in a bear market and then held for a long while. They are susceptible to high volatility and potential big losses in a bull market. And they can get obliterated if the market tanks, much more so than the normal mutual fund or the rest of the market.
The only problem I see with it is the fact it's NAV has consistently under-performed it's share price. And this goes back to the 85% of distribution being ROC rather than P/E margins and internal gains. It signals that the distribution that high can't last. They are inflating it to make the fund look more attractive to new buyers. Once all the shares sell, the NAV will readjust and the distribution will slowly come down and level off. How much I don't know.
Also, oil and gas are way below price norms right now too. So once the oil companies in the portfolio start making better margins, the fund will get a nice boost and will likely reduce the ROC percentage, which is good.
The purpose of these is for both growth and income. They sacrifice ease of liquidity and are susceptible to big volatility to generate high distribution rates. They are best if started in a bear market and then held for a long while. They are susceptible to high volatility and potential big losses in a bull market. And they can get obliterated if the market tanks, much more so than the normal mutual fund or the rest of the market.
2
Posted on 8/8/16 at 8:53 pm to BeefDawg
I assumed the distribution percentage was so high because of the general decline of the energy sector and underlying stocks - as it looks like the distribution amount is held constant. Even if it declines as the NAV increases if you get in now you still get the benefit. I don't like it being funded with assets though - as opposed to a dividend being funded by actual profit margins.
Maybe Rig will do fine....especially if he never has to sell.
On the cost basis piece - if you reinvest your distributions within the Roth aren't you still maintaining the cost basis by buying back in with the ROC? It would be hell on your accountant but you are keeping the capital invested.
Maybe Rig will do fine....especially if he never has to sell.
On the cost basis piece - if you reinvest your distributions within the Roth aren't you still maintaining the cost basis by buying back in with the ROC? It would be hell on your accountant but you are keeping the capital invested.
Posted on 8/8/16 at 8:57 pm to BeefDawg
Because it is an energy fund, would you say the market is decent for it right now?
Its at 50% below its 5 year high right now.
Its at 50% below its 5 year high right now.
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