A Closed-End Fund ETF Yielding Over 7%
May 16th at 9:31am by Tom Lydon
ETF Spotlight on the PowerShares CEF Income Composite Portfolio ETF (NYSEArca: PCEF), part of an ongoing series.
Assets: $502.5 million.
Objective: The PowerShares CEF Income Composite Portfolio tries to reflect the performance of the S-Network Composite Closed-End Fund Index, which is comprised of closed-end funds that invest in taxable investment grade fixed-income securities, taxable high-yield fixed-income securities and others utilize an equity option writing (selling) strategy.
Holdings: Top holdings include Eaton Vance Tax-managed Global CEF 4.9%, AllianceBerstein Inc Fund CEF 3.2%, Eaton Vance Tax-Managed Dive CEF 3.7%, Allianz NFJ Dividend Inter CEF 2.4% and BlackRock Enhanced Equity Dividend CEF 2.3%.
What You Should Know:
- Invesco PowerShares sponsors the fund.
- PCEF has a 1.73% expense ratio.
- The fund has 142 holdings and the top ten make up 25.0% of the overall portfolio.
- The ETF has an SEC 30-day yield of 7.2%.
- Allocations include: bonds 44.1%, high-yield bonds 17.7%, domestic equity 3.1% and option income 34.4%.
- PCEF is up 2.1% over the past month, up 3.4% in the last three months and up 8.6% year-to-date.
- The ETF is 2.5% above its 200-day exponential moving average.
- Closed-end funds are publicly traded investment companies that have raised a fixed amount of capital through an initial public offering then listed like a stock on an exchange.
- CEFs represent a fixed basket of securities, and the funds can be traded like any stock or ETF on an exchange.
- Unlike ETFs, closed-end funds can trade at a premium or discount to its net asset value because there is a fixed number of shares outstanding.
- CEFs offer higher distribution rates than mutual funds in the same category because most CEFs were created with a focus on income.
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