An unusual opportunity has arisen to buy attractive oil MLPs and high yield at a deep discount. If you subscribe to the hypothesis that oil will not stay this low forever and the U. S. economy will muddle through, it is time to step up and grab these opportunities.
The opportunities I’m referring to are in closed-end funds.
Closed-end funds trade on exchanges just like ETFs. The difference is that unlike ETFs, closed-end funds have a fixed number of shares. Therefore they either trade at a premium or a discount to net asset value. In contrast, ETFs can add or reduce shares and thus eliminate discounts.
It is common at year end for discounts on funds in unfavorable sectors to widen considerably. These discounts narrow again in the February- March period. The plan is to buy oil MLPs, high-yield funds, and senior bank-loan participation funds, but only if their discounts widen enough before the year end to put them in the buy zones.
The Arora Report has published a carefully selected list of 13 such opportunities in ZYX Global Multi Asset Allocation Alert. An example is Tortoise MLP Fund Inc NTG, If properly scaled in the buy zone, the investor will end up buying NTG at about an 18% discount to the net asset value. This is on top of this fund being cut in about one-half from its peak.
The annotated chart shows why it makes sense to buy this MLP fund now…Read more at MarketWatch
Please click here for an annotated chart of NTG.
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