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Hey everybody. I recalled someone talking about Calamos's funds a while back on here. Particularly their close ended funds, CHI, CHY, and CHW are the (3) I'm researching. I have been ready many different articles from investopia, morningstar, and other financial review/industry sites.
It seems that the main differences in close end funds opposed to mutual funds are reasonably understandable. They have a fixed number of "shares" available, They can invest in long term equities and investments, so they don't have to have such immediate liquidity, and as far as I have seen they seem to offer more consistent dividends with less fluctuation in market share price. (granted this is only in the income funds I have been observing).
I have gathered that Calamos tries to keep investors in by offering very consistant 8-10% annual dividends that are paid out on a monthly basis to provide income or high frequency DRIPS. If I am correct they are maintaining longer term investments and paying a more controlled dividend, instead of paying out maximum returns. I think this is so that they can continue to pay the expected dividend when markets fall or need to correct themselves every few years. So the idea is they have a ceiling in place, but provide more consistent returns.
I am trying to get more clarity on how the shares sell at either a premium or discount from their NAV (NET ASSET VALUE) to their market price.
So the pro for a CEF over a Mutual fund would be, consistency over longer periods.
The Con would be a ceiling of how much return you could get in a year ( but also exposed to potential losses).
Does this seem accurate to anyone who knows or is experienced with the fundamentals of close end funds?
Currently CHY, CHI, and CHW are all respectively paying a dividend between 9-10% ($.095 monthly off of a share price of $11.43). If I'm understanding this right, then it sounds like a great place to put some cash to build very modestly and consistently. Many of these funds have been around for over 10 years and have yet to fail to pay a solid dividend, even during 2008-9 stock crisis.
I'm very interested to hear what you guys know, I am trying to avoid a pitfall because I'm planning to re-allocate some sagging funds I have inherited from an Ameriprise account I have.
It seems that the main differences in close end funds opposed to mutual funds are reasonably understandable. They have a fixed number of "shares" available, They can invest in long term equities and investments, so they don't have to have such immediate liquidity, and as far as I have seen they seem to offer more consistent dividends with less fluctuation in market share price. (granted this is only in the income funds I have been observing).
I have gathered that Calamos tries to keep investors in by offering very consistant 8-10% annual dividends that are paid out on a monthly basis to provide income or high frequency DRIPS. If I am correct they are maintaining longer term investments and paying a more controlled dividend, instead of paying out maximum returns. I think this is so that they can continue to pay the expected dividend when markets fall or need to correct themselves every few years. So the idea is they have a ceiling in place, but provide more consistent returns.
I am trying to get more clarity on how the shares sell at either a premium or discount from their NAV (NET ASSET VALUE) to their market price.
So the pro for a CEF over a Mutual fund would be, consistency over longer periods.
The Con would be a ceiling of how much return you could get in a year ( but also exposed to potential losses).
Does this seem accurate to anyone who knows or is experienced with the fundamentals of close end funds?
Currently CHY, CHI, and CHW are all respectively paying a dividend between 9-10% ($.095 monthly off of a share price of $11.43). If I'm understanding this right, then it sounds like a great place to put some cash to build very modestly and consistently. Many of these funds have been around for over 10 years and have yet to fail to pay a solid dividend, even during 2008-9 stock crisis.
I'm very interested to hear what you guys know, I am trying to avoid a pitfall because I'm planning to re-allocate some sagging funds I have inherited from an Ameriprise account I have.
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