Investing
It’s no surprise that inflation over the past four years have sent the prices of goods and services steeply spiraling upwards. With certain food staples rising over 40-50%, gas and electricity over 30%, and car insurance over 55%, the economy has become one of the biggest issues heading into the forthcoming US presidential elections.
For those who need both regular income as well as preservation of capital and diversification risk mitigation, closed-end funds might be the ticket.
24/7 Wall Street Insights
- Closed-End Funds (CEF) are mutual funds that trade on major stock exchanges at a market price rather than Open-End Funds, which are obtained via separate subscription on a daily Net Asset Value price.
- Certain high-yield CEFs offer monthly dividend payments which can help to augment household budgets already stretched to their limits to pay bills.
- Passive income is simple- own quality dividends that pay you for doing nothing. Don’t miss out on our brand-new “7 Things I Demand in a Dividend Stock” report. It includes 2 A++ dividend stocks and how to spot future dividend winners that can put your returns on hyperdrive.
Closed-End Funds
Closed-end funds are a type of mutual fund that has a fixed number of shares, so it trades on the NYSE or NASDAQ like a stock, rather than at a Net Asset Value (NAV) via subscription. A majority of closed-end funds are pegged to indexes, so there are less management fees. Due to the number of shares being fixed, redemption fees are drastically reduced, so there is more cash for the fund to put to work in investments.
24/7 Wall Street has a mammoth database of dividend paying securities that has been collected and compiled in a wide variety of past articles to suit investors from every walk of life and every “know your customer” profile type. Based on market prices at the time of this writing, the following 9 closed-end funds listed can cumulatively generate a monthly income of over $450 with just $5,000 invested in each.
Calamos Dynamic Convertible and Income Fund
Calamos Dynamic Convertible and Income Fund (NASDAQ: CCD)
- Yield: 13.29%
- Shares for $5K:
- Annual Income: $664.50
- Monthly Income: $55.38
Convertible bonds are a niche of fixed-income instruments that pay their coupon yield – but have a prearranged convertibility option to common stock at the investor’s discretion. This gives the investor flexibility to take advantage of market conditions that may signal an upside swing in the common stock market price, which might prove more lucrative than the coupon income.
Calamos Dynamic Convertible and Income Fund is a closed-end mutual fund based in Naperville, IL that invests in publicly traded convertible securities, as well as corporate bonds, equity linked notes, and floating rate bonds. The fund also uses option trading strategies to boost returns.
First Trust High Yield Opportunities Fund
First Trust High Yield Opportunities Fund (NYSE: FTHY)
- Yield: 12.05%
- Shares for $5K:
- Annual Income: $602.50
- Monthly Income: $50.21
Headquartered in Wheaton, IL, the First Trust High Yield Opportunities 2027 Term Fund is a global high yield fixed-income mutual fund. Although the fund is set to cease operations in the next three years, short of a management decision to change or a shareholder proxy vote, it continues to deliver double-digit yields from its $703 million AUM portfolio.
Most high yield funds will often derive those yields from high yield bonds, which are usually rated below investment grade. This means that Moody’s and Standard & Poor’s rate the bond below BBB-, which implies a correspondingly higher risk of default factor.
87% of the bonds in the First Trust High Yield Opportunities Fund portfolio are rated BB or lower.
Abrdn World Healthcare Fund
Abrdn World Healthcare Fund (NYSE: THW)
- Yield: 12.88%
- Shares for $5K:
- Annual Income: $644.00
- Monthly Income: $53.67
Previously known as the Tekla World Healthcare Fund until it was acquired by Abrdn Inc., Abrdn World Healthcare Fund is a Boston, MA based closed-end fund that invests in both equity and fixed-income securities issued by global public healthcare companies.
With over $604.8 million AUM, the fund’s top three largest sub-sectors as of October 2024 are: Healthcare at 93% and Real Estate at 6.9%. The fund’s three largest positions are: UnitedHealth Group Inc. (NYSE: UNH), Novo Nordisk AS (NYSE: NVO) and Eli Lilly & Co. (NYSE: LLY).
PGIM Global High Yield Fund, Inc.
PGIM Global High Yield Fund, Inc. (NYSE: GHY)
- Yield: 12.23%
- Shares for $5K:
- Annual Income: $611.50
- Monthly Income: $50.96
The PGIM Global High Yield Fund is a closed end high-yield bond fund founded by Prudential Securities’ subsidiary PGIM in 2012. Located in Newark, NJ, the PGIM Global High Yield Fund is a high-yield bond mutual fund. Management policy prefers shorter duration maturities of bonds that are rated no higher than Ba1 or BB+ by Moody’s and Standard & Poor’s, respectively. As of August, its $684.3 million total AUM portfolio held 95.72% fixed income securities, with 1.17% US stocks, 0.45% foreign stocks, and the rest in cash.
NYLI CBRE Global Infrastructure Megatrends Term Fund
NYLI CBRE Global Infrastructure Megatrends Term Fund (NYSE: MEGI)
- Yield: 12.44%
- Shares for $5K:
- Annual Income: $622.00
- Monthly Income: $51.83
Formerly known as Mainstay CBRE Global Infrastructure Megatrends Term Fund, the name was changed from Mainstay to NYLI as of September, 2024. Designed to have an intended 12 year lifespan, the NYLI CBRE Global Infrastructure Megatrends Term Fund is scheduled for liquidation on or about December 15, 2033.
Headquartered in New York City, MEGI’s theme imperatives are:
- Decarbonization
- Asset Modernization
- Digital Transformation
With its $1.08 billion AUM managed by NY Life Investments, MEGI is a closed-end mutual fund that invests in global common and preferred stocks that engage in business activities that are simpatico with the fund’s themes. As of October, 2024, The fund was almost entirely invested in equities, with a roughly 60/40 ratio of foreign/domestic US allocation, and a 30% short position in bonds.
DoubleLine Income Solutions Fund
DoubleLine Income Solutions Fund (NYSE: DSL)
- Yield: 12.75%
- Shares for $5K:
- Annual Income: $637.50
- Monthly Income: $53.13
DoubleLine Income Solutions Fund is a closed-end mutual fund that invests in global fixed-income instruments with a goal of maximizing consistent high income. Based in Tampa, FL,, it wields a $1.72 billion AUM, investment warchest. The fund’s portfolio is heavily weighted 76% in CCC and lower rated bonds, as of October, 2024.
68.9% of the portfolio is allocated to corporate bonds. 21.2% are securitized, and 8.47% are government, i.e. sovereign bonds.
Among the largest issues in the portfolio are US Government notes and bonds, as well as Canadian, Brazilian, Peruvian, Spanish, and Colombian energy sector bonds, and an Indian mining company.
Virtus Diversified Income & Convertible Fund
Virtus Diversified Income & Convertible Fund (NYSE: ACV)
- Yield: 12.33%
- Shares for $5K:
- Annual Income: $616.50
- Monthly Income: $51.38
Located in the NY City Paramount Plaza office building, the Virtus Diversified Income & Convertible Fund is a closed-end mutual fund that invests in a mix of convertible stocks, dividend stocks, and high-yielding bonds from the capital markets. It is co-managed by Allianz Global Investors US LLC and Allianz Global Investors Fund Management LLC.
Investment in convertible securities gives the option to the shareholder to switch from a fixed income coupon payment security to convert to a preset number of common shares. This can help enhance returns if the capital appreciation upside potential appears stronger than the income component, especially if the issuing company announces news that causes a buying surge in the common stock.
While the fund is invested in most of the major industrial sectors to some degree, the three largest exposures in the $335 million AUM portfolio as of October 2024 are: Technology (29.06%); Financial Services (14.01%), and Healthcare (13.5%).
PIMCO Income Strategy Fund II
PIMCO Income Strategy Fund II (NYSE: PFN)
- Yield: 11.42%
- Shares for $5K:
- Annual Income: $571.00
- Monthly Income: $47.58
Based in Newport Beach, CA, the PIMCO Income Strategy Income Fund II is co-managed by Pacific Investment Management and Allianz Global Investors Fund Management. Its $755 million AUM portfolio is invested primarily in floating rate debt instruments.
Allocation-wise, 38.84% are invested in government securities, 19.67% in corporates, and 29.89% in cash. Entering October, ratings are relatively evenly dispersed. 22.4% are AAA, 10.85 are AA, 5.68% are BBB, 14.12% are BB, 18.75% are B, and 27.8% are CCC or lower.
Nuveen Credit Strategies Income Fund
Nuveen Credit Strategies Income Fund (NYSE: JQC)
- Yield: 11.41%
- Shares for $5K:
- Annual Income: $570.50
- Monthly Income: $47.54
The San Francisco based Nuveen Credit Strategies Income Fund is a closed-end mutual fund that mostly invests in global senior loans, high yield corporate debt, and collateralized loan obligation (CLO) debt. The fund uses leverage and may also invest in the public equities markets.
While mutual funds are considerably lower in volatility than individual stocks, regular monitoring of news events and market prices should be conducted so that if any circumstances should change, then the investor can adjust the portfolio accordingly.
| Name | Tkr | Yield | Annual | Monthly |
| Calamos Dynamic Convertible and Income Fund | CCD | 13.29% | $664.50 | $55.38 |
| First Trust High Yield Opportunities Fund | FTHY | 12.05% | $602.50 | $50.21 |
| Abrdn World Healthcare Fund | THW | 12.88% | $644.00 | $53.67 |
| PGIM Global High Yield Fund, Inc. | GHY | 12.23% | $611.50 | $50.96 |
| MainStay NYLI CBRE Global Infrastructure Megatrends Term Fund | MEGI | 12.44% | $622.00 | $51.83 |
| DoubleLine Income Solutions Fund | DSL | 12.75% | $637.50 | $53.13 |
| Virtus Diversified Income & Convertible Fund | ACV | 12.33% | $616.50 | $51.38 |
| PIMCO Income Strategy Fund II | PFN | 11.42% | $571.00 | $47.58 |
| Nuveen Credit Strategies Income Fund | JQC | 11.41% | $570.50 | $47.54 |
| Total: | $5,540 | $461.68 |
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