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Money Matter$

Insights from the Sommers Financial Management Team

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We're Finding Bargains in Closed-End Funds

We had a client commit $10,000 to try out our Long/Short CEF-Arb strategy on March 28, 2016. One year later, on March 31st, their account was valued at $11,315—up over 13%, after fees. The biggest swoon the account experienced was a drop of 2.9% in October. That compares to the S&P 500, which saw a 17% return in the same 12-month timeframe, but experienced a drop of 6% in June. This is what the investment world would call a good upside/downside ratio. We captured 76% of the market’s move up, but only 48% of the move down. A golden goose? Almost!

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Closed-End Fund Arbitrage

During a recent conversation about how to invest her portfolio, while looking at our model portfolio offerings, a client remarked about our Closed-End Fund (CEF) Arbitrage model: “Well this one appears to have the best potential for higher returns, without taking on any more risk than the ‘Conservative’ model. Why wouldn’t everyone choose CEF-Arb?”

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