How To Fulfill A Vow Of Poverty

Need a convenient way to fulfill a vow of poverty? Invest in closed-end fund IPOs. Here is the most recent one that I have seen, the AllianzGI Diversified Income & Convertible Fund (ACV).

As described in Is The Market Fair? Yes Vs. No, closed-end fund IPOs have a consistently losing record. It fits the pattern of the earlier examples that I have discussed in past articles. The underwriters propped up the price long enough to saddle up and ride out of town before the market re-priced this down by over 25%. The bag holders may have overshot somewhat. Today, the market price is a 16% discount to NAV, which is greater than the average discount year to date.

Another discounted closed-end fund to consider is Ares Dynamic Credit Allocation Fund (NYSE:ARDC). It has a 17% discount which is greater than its 14% YTD average discount. It has a 10% distribution yield, 6% of which is from income only.

Top 10 Issuer Holdings



Rite Aid Corp


Alinta Energy Ltd


Gala Coral Group Ltd


TMF Group


Altice International




NBTY, Inc.


Ferrellgas Partners


Guala Closures S.P.A.


Premier Foods




This data is subject to change on a daily basis.

These assets are out of favor and so are available for sale at a substantial discount to their value. For a hedge, one can short similar assets at a premium via Eagle Point Credit (NYSE:ECC ).

The NAV is $15.49 and it is hard to think of a reason why the stock should trade for a premium to that. There is no evidence of management skill that would justify such a premium.

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