The real value in the fund is its two preferred shares. Now yielding close to 9%, Aaa rated, big discounts (adding lots of call protection) and with income mostly taxed at capital gains rates. Does anyone know of a more attractive fixed income vehicle ?????
No, I don't know of anything much better. The downside to the preferred is limited to:
1.)If the assets of the fund decline to less than twice the total value of the preferred, a redemption is forced. This double (mimimum) coverage is why they have a AAA rating.
2.)Dividends are either income or capital gains only to the extent that there <is> income and/or capital gains to pay the dividend. If there is neither, the dividend is paid, but it is treated as return of capital, thereby reducing your cost basis which, of course, has potential tax consequences.