See the above chart to get a take on downside risk. The fund will trade at a NAV discount when bond momentum changes. Pimco just took over MTS and trades at a -5% discount to NAV. Yes..I own MTS shares.
You're preaching to the choir here. Most people who hold this fund are doing it for the income, not price appreciation. I'm fairly certain by now they are well aware that a premium to NAV exists. They have probably already taken steps to protect themselves in case of a drop, such as maintaining a small position. In my case, a 30% drop really isn't a major issue, because this fund is only 5% of my total portfolio.
Now, it is nearly certain that the bond bubble will burst, thing is, nobody can say for certain how soon, and sometimes these things go on for a long time. If you don't get crazy with the fund then this is a great income source. Just balance it out by using the income on more stable investments.
sorry, but recent history doesn't prove your point, the last downturn had the NASDAQ drop about 17%, SPX around 15% down for the period of April 21st to July 2nd, yet PHK was up about 4% plus you got 2 dividends. It's when the general market is on a strong uptrend that PHK slightly under performs on a relative basis. At least for the last two years. Play with the charts, you can prove it to yourself, no reason just to take my word for it. Plus you get the dividend. At this price and under these market conditions I see no reason to add or sell any of my position. I'm happy to just harvest dividends for the time being.
lets be real 1)unless phk has the bonds called and replaced with 8 to 9 per cent bonds and AND 2) Stop the leverage phk can pay maybe 11% to 12% month and throw in 2 to 3 cents from nav each month. So far the perfect scenario has been our ally