OPPORTUNITY TO BUY SENIOR BANK LOANS YIELDING 7.7% AT 10.2% DISCOUNT TO NET ASSET VALUE $VVR

After Brexit, there is an opportunity investors should consider buying senior bank loans.  The vehicle of choice is a closed end fund that trades under the symbol VVR.  There is already an 8% allocation to VVR in the Lower Risk Model Portfolio.  Now we are adding a 5% allocation to VVR in the Low Risk Model Portfolio.

Here are the key points of this call.

• Senior bank loans are often more secure than many bonds issued by a company.
• It is important to buy a diversified portfolio of senior bank notes.  VVR provides great diversification with 618 different loans.
• VVR buys floating rate loans. This dampens the interest rate risk.
• VVR is a closed end fund.  It trades like an ETF on the stock exchange. However, unlike an ETF, it has a fixed number of shares. Due to a fix number of shares, VVR often trades at a premium or at a discount to net asset value.  At present VVR is trading at 10.2% discount to net asset value.
• VVR is providing total yield of 7.7%.

The buy zone is $3.31 to $4.11.  As of this writing VVR is trading at $4.09.  Consider scaling in.  Suggested buy points are $3.37, $3.63, $3.81, and $4.02.    (Suggested buy points are only guidelines, investors should use their own risk preference to scale in.)