Just as Bobby Petrino left Atlanta under cover of darkness so too did two very interesting ETFs get quietly listed today.
The first is iShares JP Morgan USD Emerging Market Bond Fund (EMB) with a hat tip to 24/7 Wallstreet.
Based on the name I infer that the bonds are dollar denominated like the similar PowerShares product (PCY).
The average coupon is 7.76% but the average price, assuming that means price paid is over $110 so the yield is probably in the sixes and in fact I found an average yield to maturity of 6.29% on the iShares page but can't vouch for that.
EMB is heaviest in Brazil, Russia, Turkey and Venezuela with ten countries in all.
The other fund is the PowerShares S&P 500 Buy Write Portfolio (PBP) with a hat tip to me as I found it on the home page when I went to compare EMB to PCY. I exchanged emails with someone at PowerShares about this fund a week or two ago and was told it is an ETF (as opposed to the ETN from Barclays) and it will pay a dividend.
I am excited (wow I am a nerd) about both of them. I will say easy does it on PBP for a while. While I am sure this is wrong, this strikes me as a candidate for having unintended consequences. I really do hope I am wrong as I would like to use it but it will need to prove itself before I do.
11 comments:
Indexuniverse.com also has a post up about PBP and notes that others are soon to follow, including a buy/write for the Nasdaq 100. Also a couple of new strategy etfs in the offing from Powershares. Pretty interesting if not exciting.
Carl(?) Delfield had a post about the other ones on Seeking Alpha.
PIE is interesting (emerging market technical leaders). I think of emerging as capturing specific sectors or country types. buying a fund in the space that can change holdings regularly means giving that up. I could see that resulting in a huge winner or a total dud (watch I'll be wrong and it performs the same).
Funny, I bought PCY Wednesday for my Speculative Portfolio. The yield and portfolio are interesting and fill a void for me. Not for the faint of heart. And not for my Permanent Portfolio at this stage.
I've been doing some research on
this....great topic. What about
EDD (closed end vs. open?)
and PLMAX. Any opinions?
thanks in advance
I wrote about EDD for Real Money. I am favorably disposed to the concept but the fund is not immune when problems hit the CEF market. A few clients own a different share class of PLMAX and I have been pleased with it. If you look at, it did not drop a dollar on Dec 12, it went ex that day and Yahoo is not picking it up.
Roger,
I've seen some articles about closed end funds with realitively high yeilds(mostly equity income type funds with about an 8% yeild) which are selling at a large discount because of year end selling. Do you think these are appropriate for a portfolio seeking a somewhat stable principal and high income? I know you do not recommend specific stocks or funds but do you have any other general suggestions?
seeking a somewhat stable principal?
So look at the charts of some CEFs you are considering.
They are probably stable...until they aren't, if you know what i mean.
Going too heavy causes problems. If you have a couple with a small weight that go down 20% no real harm done. people who go really heavy--harm done.
As far as the tax loss selling, that seem reasonable but I am not sure gaming that as a catalyst for the general decline jibes with seeking a somewhat stable principal.
Roger,
What about the closed-end Buy Write ETF MCN. It currently trades at a 15% discount to NAV with close to a 12% yield. Why pick a new buy write fund when these attractive discounts are available? Also BEP is now selling at a 6% discount. Early in the year it was selling for a +20% premium to NAV. It's current yield is close to 13%. What are the advantages of using a new product? Thanks,
gaming future moves in the discount are difficult and aggressive and if someone hired me and said they wanted a stable price and income I am not sure loading up on cefs is the way to go.
if gaming this sort of thing is in your wheelhouse who am I to say you shouldn't?
mcn is a fine fund. I used to own it for clients but switched quite a while ago now infavor of foreign in the space.
the advantage of the new product, if it ends up working will be that returns will look like the BXM index which is a compelling idea and it should not get crushed as bad as a similar CEF during the next market event. again, if the ETF works.
Hi Roger,
What did the PowerShares folks think the PBP dividend would be? On their web site it shows $.05 dividend for 1Q08.
Other ETFs like NFJ have a very high dividend so I would have expected the same from PBP.
Thank you,
Tom F
NFJ appears to be much more volatile as I would expect for a CEF.
The $0.05 is a disappointment but I am not sure if there is a lag of some sort such that due to the fund commencing in 12/27 that it does not take in a full three months.
One thing I can tell you is the PBP's dividend will not be constant. When premiums are richer the dividend will be richer and vice versa.
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