Friday, February 15, 2008

Blue Harvest

I have now gotten 5 e-mails plus commenters asking about closed-end funds. I disclose that I play in closed-end funds a fair amount, and I doubled my position today. These funds can be kind of thin, so I don't want to talk about what I actually bought, but here was my process. You'll need Bloomberg, although there are probably other ways to skin the same cat...

1) Run a FSRC. Select all closed-end funds with the objective type being municipal. Should be 265 of them.

2) Once the search is displayed, hit the "Edit" tab, and select "Search Display." Then you can pick various measures of short-term price movement. I went with 1-Day Total Return (Last Close) and 1-Day Total Return (Real Time) although now that the market is closed you can probably just select 2-Day Total Return. Bloomberg won't let you sort by any real-time column, that's why I used the Last Close option.

3) Once you find a fund you like, type in the equity ticker, then RELS. So for example, XYZ Equity RELS . Option 19 will display all preferreds associated with that fund. If there is more than one, then look at each of them separately.

4) Once you have the preferred loaded, type DES, then pick option #2 (Floating Rates). That will tell you what the recent auction history has been as well as what the current level is.

5) Once I established that there was no problem with any auctions, I went ahead and bought the fund.

Now, you really have to understand the consequences of the fund's leverage as well as how thin CEF can be before buying. Its not unusual for these things to have like 1-2% bid/ask spreads so be careful. Remember, I'm not recommending anything, merely telling you what I've done.


Timothy said...

Suggest you use EQS rather than FSRC which will stop working next week. Double check any results though, for some reason Bloomberg is rushing this out even if it feels like a beta version; I must spend an hour a day in dialogue with them over this and other general fundamental data issues, if I ever need a job I will look to them.

Momo Fader said...

A couple of other ways to skin this cat: advanced search

ETF Connect, find a fund

cburn69 said...


Do you know how to buy the preferred's? Am I correct that the preferred's have weekly reset rates as well as the assets in the portfolio of the CEF?