Higher quality clo's bring lower yields and lower returns to the company and finally lower dividends to investors...the previous responder has it right...these have higher risk profiles. most of these have a high enough dividend to approach preservation of capital. as i have said, as a general comment, these are not really traders; the portfolio is changing but not in a rapid manner; rates of return are reasonably predictable and because of closed -end fund accounting requirements approx 85-95% if income is required to be distributed to investors similar to mlp's and bdc's. the cef's migrated over time to what we now call mutual funds. one of the replies on this board quite correctly commented on "distributable income", and pointed out that it was estimated $.90 (cents), for the reporting period which easily covers the .60 announced for march and june. another comment re: net asset value and how it has to be increased by management: this can only happen if loan demand increases soon and rates experience significant increases which i personally do not believe is likely in the next 12-24 months. the obvious attraction to cef's is dividend yield but with this goes decrease in nav. take a look at cef's inception prices, time in business and current value and you will see, except in the most conservative funds, ( usually with lower dividends) a decrease in value. this is not unusual. Ie: look pht (pioneer fund boston). it has been a good performer for a long period of time and generally earns the dividend. i would consider this a "good performer over time, and yet the value from inception is lower, again not unusual. this is the nature of cef's and in my opinion and experience are not what i would consider traders. i have no stocks and havent for years....i realized a long time ago that i was not skilled enough to "time" or "trade". one important measure i have always considered was the amount by managers invested. dr.e. Cowden
I'm so pleased that you mentioned this and you are absolutely correct. i was surprised someone else didn't mention this...it appears today that others ave seen this and are buying....great comment!!!!!
I think you bring up a possible explanation for the reduction in the nav....also the unreserved $500,000 writedown of insurance. i suspect this was purchased to hedge rate increase but i don't actually know.