Another Innovative CEF Family

First Trust Portfolios L.P. - www.FTPortfolios.com

When I first wrote about covered call funds I mentioned one from First Trust. I was doing what I usually do on Thursday nights, cruising through some listings on ETFConnect, just kidding about that being a usual Thursday night. But that is what I was doing.

I found my way to the above link to see what else First Trust offers. There are several interesting products and some that would seem to be duds. I have written before about First Trust's covered call fund (FFA). They have several US equity CEFs that one way or another tie in with Value Line. While I like CEFs in general I am not a big fan of using them for US exposure to growth. To clarify I view the covered call funds as more of an income idea. If/when price appreciation comes that will be nice but my expectations are low.

Their newest fund, Aberdeen Global Opportunity Income fund may be interesting. It invests in foreign bonds with the primary objective being income. It is too new to get much information but it is worth watching for a while.

The fund that interests me the most is the Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund (MFD). It is kind of a foreign utilities fund. If you click through to ETFconnect's page on this and look at the yield, that 13% number is wrong. That includes some sort of gain distribution. The regular dividend is $0.30 per quarter which gives it a 5.5% yield. The fund trades at a slight discount to its NAV. The country make up is 37% UK, 13% US, 8% Italy and 6% Australia.

The upside I see is that it might correlate to the European bond market (click here to see why I think this may be useful) because it will own common, preferred and debt and I think the fund could offer a little growth.

The downside might be its weight in the UK. As I wrote earlier the UK has an inverted yield curve. This usually means economic trouble. Since I wrote that article the FTSE has moved higher. I have taken no action yet because the market shows no sign of trouble. This is an important point. I believe I see a risk to the UK market. That risk may never play out but I continue to monitor what is going on. Every theme you invest in has a risk or two. Know what they are, recognize when they start to play out and take action if/when it is necessary.

I have already had some public and private comments in response to my floating the idea of a newsletter. To be clear if I proceed it would not in any way alter the flow of posts to the blog.