American Goldfinch in flight.
As one of the poorest performing portfolios, if not the least productive, it was encouraging to see Kepler turn in the top performance in August. It might be an outlier or the beginnings of a strong future using Closed-End-Funds (CEFs). The Kepler is certainly a portfolio to watch over the next several quarters.
Shares of several CEFs were purchased over the last few days in an effort to bring the securities closer to their target percentages.
Kepler Asset Allocations
The cut and past software is acting up and that accounts for the “full screen” attachment shown below. Expand the screenshot as much as possible so you can see the asset allocation plan for the Kepler.
Based on the current allocation the portfolio is expected to return close to 12.0% in dividends.
Kepler Rebalancing Recommendations
Shares purchased over the last two days brought each of the CEFs below target within 0.5% of the target. If the security is above target I forget it. New cash and dividends will be used to first bring a CEF with a Buy recommendation up to target. After that is accomplished I will concentrate on securities that are most under target.
Kepler Performance Data
As mentioned above the Kepler has been a poor performer since 12/31/2021. In August the return was over 3% or the top return of portfolios I’m tracking here at ITA.
Kepler Risk Ratios
While the IRR for August was strong, the Jensen Alpha only improved slightly. Using the Information Ratio as an indicator, the Kepler lost ground to the AOR benchmark.
Comments are always welcome.
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Hi Lowell,
What did you finally settle on as the buy criteria for a CEF. Also, is there a sell criteria?
Thanks,
Bill
Bill,
Initially the goal is to begin with all CEFs no more than 0.5% out of balance to the low side. This is regardless whether or not the CEF is a Buy, Hold, or Sell. Now that all 20 CEFs are close to target here is how I plan to handle new money from infusions of cash or dividends. Before I get to that, I don’t plan to sell unless the yield drops down to something close to 7% or 8% or a level that no longer merits holding on to the CEF when there are better opportunities.
When fresh cash is available I will check the Kipling spreadsheet to see if any Buy recommendations are below target. The CEF most out of balance to the low side will be brought as close to target as available cash allows. If there is still cash available I will move to the next CEF with a Buy recommendation and bring it up to target. I will continue this process until all cash is used.
Ideally I prefer to hold all CEFs as close to the 5% target as possible.
Lowell
OXLY recently had a reverse split so I will be following that yield over the next few weeks. I may need to sell this CEF and replace it with a security generating a higher yield.
Lowell