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AllianzGI Convertible & Income Message Board

  • hungrydoggy hungrydoggy Jun 30, 2011 10:11 AM Flag

    Looking for opinions

    Is this fund a hold? I'm looking for serious and thought-out opinions only.

    I bought my shares on 5-12-11 at $9.92. So in less than a month I'm down something like 5% capital loss. Bad timing. My best guestimate is that the fund will most likely recover that 5% by the end of the year. But as you can see, while the fund seems to be fast to drop, it barely budges upward in price per share even on days when the general market is going gangbusters and even as most other funds are rising.

    If you are a shareholder, what is your honest opinion of this fund? Is it a dog? I bought my shares for income and for price stability. While I'm getting the income, the ride is rougher than I bargained for and there are other funds out there that are returning a comparable 10% to 11% dividend and are recovering more quickly. Is it worth holding this for income? Honest opinions only please.

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    • You've stated that you bought the fund "for income and price stability"; What you bought is "high income/not so much price stability" and the fact is, you can't have both. You need to decide which is more important: high income or high price stability. Personally, I want high income that will be relatively stable and I'm not so concerned with price stability, hence I have a significant portion of my portfolio in this CEF and continue to add with that portion of the divvies that I don't need as income.

      • 1 Reply to excapnal
      • I also bought this (as well as NCV) for high income as opposed to price appreciation. I have been adding since my initial purchases in the $5 to $6 dollar range whenever they have one of their unusual drops. This is a substantial percent of my Roth IRA portfolio and I look forward to the dividends which I use to trade other stocks, right now mostly MREITS. I am planning to hold for a long time and eventually will take the dividends as income from my Roth.

    • I like NCZ but bought long ago at a discount. I consider NCZ a very good hold at my costs and would add if premium/discount got closer to NAV.

      Check some of the other posts here if you haven't already.

      I would be reluctant to add NCZ shares when price is at a larger premium or when there has been a steep increase in 'price' and/or 'NAV' without some very clear understanding as to why a closed end fund (which can't add much capital) suddenly moves up as it did in the early part of this year.

      NCZ is largely a debt fund with the occasional potential of changing some loans to stock (convertibles). Don't see those conversions as steady flow of income but as bubbles.

      Although average duration of its holdings is low and the fund should be able to adjust to rate changes quickly, the high yield (risk) nature of their holdings translates to watching for potential rate changes. There will be an impact. JMHO

      • 1 Reply to try2plan
      • Thanks for your quick response.

        I knew the fund was trading at a premium when I bought it, but decided to take a chance on that anyway. The underlying debt appeared to be rising in value which I figured would raise the net asset value. Additionally I make it a policy to never buy a fund that is not trading at a slight premium as it usually indicates there is something wrong with the fund's management.

        I bought it as a long term hold, and at the time of purchase I was aware that the fund has had some steep drops in the past. But with a gradually rising general market I wasn't expecting so steep a drop so soon after buying.

        I have doubts about how much rising interest rates will actually affect the share price. As you say, they have a lot of short duration debts. And it is beginning to look like interest rates may stay low through the end of next year. And if the general economy slowly improves, the fund's holdings may gradually increase in value as the credit ratings of the debt issuers goes up.

        I'm leaning toward a wait and see "hold." But I'd welcome any other opinions.

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