Fri, Aug 29, 2014, 12:24 AM EDT - U.S. Markets open in 9 hrs 6 mins

Recent

% | $
Quotes you view appear here for quick access.

Gabelli Utilities AAA Message Board

  • sammanewitz sammanewitz Jan 10, 2012 6:38 PM Flag

    Kiplingers

    Very Negative article in the new issue of Kiplingers. Check it out

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • He does make some true points, only thing he leaves out though is the tax advantage of ROC. The amount of money you can save per year in taxes adds up as well.

    • "Do you believe that GABUX's investment strategy has changed or should change?"

      I believe that your naive to undisclosed fund activity aka trading secrets of the industry that can go undisclosed to protect and make financial institutions profitable and succeed.

      Big business massages the politicians and regulators that write policy and law...

      So read between the lines and fragments and realize the reality of how the finacial arena is not about the full disclosure you assume.

    • <Alas, there's a catch -- and it's a doozy. The fund's true yield, based on the dividends and interest it earns minus annual fees, is actually about 1%. Where does the 14% come from? It's based on distributions that consist almost entirely of a return of capital. That literally means you're getting your own money back. The 14% yield is a mirage.>

      What a clown. You can tell he hasn't fully researched this fund or how it has created value over the years and maintained the same divvy since inception, even through the worst financial crisis in our lifetimes. It is obvious he hasn't researched what "return of capital" means with respect to a fund that has gazzillions in unrelealized capitals gains - allowing them to keep $400M of this $2B monolith in liquid funds that can be paid out in divvys and/or held back to invest during market pullbacks.

      If he would have done his homework he would know that a significant amount of this fund's value creation, and ability to sustain divs, comes from skillfully picking the cream of the utilities crop over the years - investments that have benefited considerably from consolidation and acquisitions over the years. From CEG to BUCY to SUG to EP, etc etc etc, all companies that have been major GABUX holdings that have been acquired and generated genormous returns for the fund.

      What a Bozo. Kiplinger should know better than to publish an article from someone who is obviously clueless insofar how this fund creates $ and the unrealized value inherent in the fund.

    • Quite frankly, this article is a great example of the foolish who masquerade in the mass media as anal-ysts, or what ever you want to call them

      No explanation provided to give investors the entire pix of gabux. He was cornered by the investor, and wrote a cya.

      This makes it hard on the good writers like geo here in this mb.

      No sense hashing over old stuff again, but rlp, you should have added a caveat to your post rather than just placing it on the mb. All you managed to do was further the lack if full disclosure. Please bear that in mind.

    • Can anyone find the error in the Kiplingers magazine article writer's logic when he writes, "The fund's true yield, based on the dividends and interest it earns minus annual fees, is actually about 1%. Where does the 14% come from? It's based on distributions that consist almost entirely of a return of capital. That literally means you're getting your own money back. The 14% yield is a mirage."

      Anyone? There is a glaring error here. An error in fact. A tip of my cap to the first person to correctly identify the error that makes this article shallow and nearly worthless.

      I think some of you will get it.

      I'll give you a clue. In fairness the writer does go on to write, "But unless a fund's holdings produce substantial appreciation, its NAV melts and melts."

      The author states, "Gabelli Utilities has maintained the 7 cent monthly distribution since 2000. But it has done so at a price: Its NAV has eroded from nearly $12 per share in 2000 to the current $5.99."

      What the author doesn't mention is that the NAV has risen from $4.93 in March 2009 to $6.01 today. So if the NAV has risen over $1 (nearly 20% in a little less than three years).
      For comparison the Franklin Utilities Fund's NAV also eroded over from $15.50 to $8.35 from October 2007 to March 2009.

      I expect better from Kiplingers writers.

      • 1 Reply to fredkane3947
      • I wish someone would recognize the real error in the article- I guess its up to me

        "If a fund isn't earning 14% from dividends and interest, how does it come up with the cash to make such a large payment? It can do so by borrowing, tapping its cash reserves, liquidating fund assets (regardless of whether that's a smart investment decision) or selling new shares"

        most utilities foriegn and domestic can accomodate half the 14% in dividends

        and did someone say there is no turnover in equity trading strategies ?

        finally the undisclosed holdings and dark pools that everyone is just as adamant against occuring as they are to believe Ft.Knox has a legitimate bullion base...

    • The Great Yield Mirage
      Be wary of yields that seem too good to be true.
      By Jeffrey R. Kosnett, Senior Editor, Kiplinger's Personal Finance
      February 2012

      After I recently praised electric-utility stocks and funds that invest in them as underappreciated sources of tax-friendly, 5% dividend yields, a reader named Mathew took me to task for omitting Gabelli Utilities Fund. The fund's Class AAA shares (symbol GABUX) "currently yield a dividend" of 14%, with no upfront sales load and reasonable expenses, Mat wrote.

      Obviously, a 14% yield catches the eye. Gabelli Utilities pays Mat a fixed 7 cents a month per share. That's 84 cents per year. Divide that by the fund's net asset value (NAV) per share of $5.99 and you get 14%. So there is a veneer of truth in what Mat says.

      Bogus Figure
      Alas, there's a catch -- and it's a doozy. The fund's true yield, based on the dividends and interest it earns minus annual fees, is actually about 1%. Where does the 14% come from? It's based on distributions that consist almost entirely of a return of capital. That literally means you're getting your own money back. The 14% yield is a mirage.

      When it comes to funds, there is widespread confusion about what yield really means. Yield is what a fund pays out in dividends or interest or both, divided by the fund's share price. Distributions refer to everything a fund disburses to investors, no matter the origin.

      If a fund isn't earning 14% from dividends and interest, how does it come up with the cash to make such a large payment? It can do so by borrowing, tapping its cash reserves, liquidating fund assets (regardless of whether that's a smart investment decision) or selling new shares.

      But unless a fund's holdings produce substantial appreciation, its NAV melts and melts. The concept "is kind of sketchy," says Mitch Reiner, of Capital Investment Advisors, an Atlanta firm that specializes in high-yielding portfolios. He compares the results of a managed-payout policy to the depletion of an annuity balance if you were to withdraw more money each year than the annuity earns on the principal.

      In today's super-low interest rate climate, no ordinary utility fund could possibly support a 14% yield with its earnings alone. But "the average person doesn't get this," says Maury Fertig, head of Relative Value Partners, a Northbrook, Ill., firm that specializes in high-yielding investments. "People see a fund's payout numbers, a broker talks it up, it sounds great, and so they buy," Fertig says. Usually, it's to their regret.

      Gabelli defends the managed-distribution concept, which it employs in several funds, as fair if you want "predictable, but not assured" payments. Helped by inflows from selling new shares, Gabelli Utilities has maintained the 7 cent monthly distribution since 2000. But it has done so at a price: Its NAV has eroded from nearly $12 per share in 2000 to the current $5.99. To make the fat distributions, the fund holds a lot of cash, which can be a drag on performance, especially when cash pays zilch.

      All this said, Gabelli Utilities is not a bad fund. Over the past ten years through December 2, the fund returned an annualized 7.6%. That beat Standard & Poor's 500-stock index by an average of 4.7 percentage points per year and the typical utility fund by an average of one point per year. These figures assume reinvestment of distributions, which is of little concern to investors seeking fat yields. And lest you think I'm unfairly maligning Gabelli, I should note that many fund companies, including BlackRock, Eaton Vance, MFS and Pimco, sponsor funds with similar distribution policies.

      But just because respectable companies sell these funds doesn't mean they're good products. If you want income but must preserve your principal, avoid Gabelli Utilities and similar funds.

      • 1 Reply to rlp2451
      • The fund does not advertise a 14% yield. Where did he find it? Perhaps he should have written an article about the folly of using certain websites for getting all of your information about your investments. Instead he wrote an article about a fund that he failed to do any dd at all...besides yahoo finance or the like.

    • Link?

 
GABUX
5.450.00(0.00%)Aug 28 6:25 PMEDT

Trending Tickers

i
Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.