- a lot longer! The FOMC notes were printed last week when Fed officials predicted higher interest rates would be with us through 2026. This caught many investors by surprise because the hopes were that rates could drop eventually in 2024.
I am not convinced the Fed can keep rates high until the end of 2026 without breaking anything in the economy, he said.
In the here and now, inflation is still up above 4.0%, which is why it's important to focus on income-producing investments for your portfolio.
As always, one of my favorite methods for generating income is through closed-end funds.
CEFs are a type of mutual fund that issue a limited number of shares through a single initial public offering to raise capital for its initial investments. The shares can then be traded on a stock exchange, but no new shares will be created and no new money will flow into the fund.
This means that you can purchase shares of a CEF at an actual discount to the NAV.
With the ability to buy shares of CEFs at a discount to their NAV, CEFs can be a great choice for investors looking for a professionally managed income-producing portfolio.
This week I'm watching Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund, a closed-end fund that invests in a diversified portfolio of common stocks and writes call options on one or more U.S. and foreign indices on a substantial portion of its common stock portfolio to generate current earnings from the option premiums.
The fund's portfolio contains 287 equity holdings with household names such as Apple Inc., Microsoft Corporation, Amazon.com Inc., LVMH Mot Hennessy Louis Vuitton SE, and Nestlé SA, among others, with weightings of 6.41%, 5.61%, 3.09%, 2.29% and 2.20%.
As of Q2 2023, 96% of the stock portfolio has call options written, with an average of 16 days until expiration and strike prices that are, on average, 0.30% out-of-the-money.
BCAT is not only trading at a significant -10.8% discount to its NAV, but it also delivers a healthy 9.09% yield. This is more than double the rate of inflation and nearly double what you can get in most high-yielding money market accounts.
Be careful out there and keep an eye out for more opportunities later in the week.
This Stock Is Yielding Over double the inflation rate right now appeared on total wealth.
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