Diversifying with Utilities

AFT: Sold All Shares 

Last month I sold half my AFT because the price had gone up too much. I just sold the remainder because it is being acquired by MFIC. 

I bought AFT based on its diversified portfolio of fixed income investments. After the acquisition, AFT shareholders will become owners of MFIC....a Business Development Company (BDC). I'm not predicting that MFIC will fare any better or worse than AFT, I'm simply looking at 2 very different types of assets. AFT was a fit for my portfolio, and MFIC isn't. I already have more than enough BDCs.

GLAD: Sold All Shares

Sold all of my GLAD shares. No concerns about the company, but I’m gradually trimming my weighting in individual BDCs (but no change to the PBDC fund). This one has appreciated 15% since April 8th, 2024. It was yielding 9.9% when I bought it, and the price increase has lowered the yield to 8.55%

ASGI: Bought (1.79% Allocation)

This is an infrastructure closed end fund (CEF). I want more exposure to infrastructure and utilities and this fund addresses the former. If you annualize the most recent distribution, it equates to a yield of 13.8%.

The yield is high because the fund announced in May that they have increased the distribution from 9% of NAV/year to 12% of NAV/year. That means that if NAV declines (quite possible), then so will the distribution. I’m buying this fund assuming that the distributions may decline slightly but I expect my yield on cost to remain above 9%. 

Pros

*No leverage

*Diversified portfolio (almost half is outside of North America)

Cons:

*High expense ratio (1.83%)

*Short history (2020 Inception)

Fund Website: 

https://www.abrdnasgi.com/ 

CEF Connect Charts: 

https://www.cefconnect.com/fund/ASGI

HTD: Bought (1.81% Allocation)

This CEF yields 8.2% and consists of utilities, corporate bonds, and preferred shares. 

Pros:

*Long Distribution history (going back to 2004)

*Only 1 distribution cut (2009: $0.14 to $0.09)

*Current discount to NAV of 8.4% is close to its 52 week average (ie not cheap, but not as expensive as most funds are currently)

Cons:

*Uses leverage of approx 35% 

*High expense ratio (1.14% Management Fee + 3.11% interest expense) 

Fund Website: https://www.jhinvestments.com/investments/closed-end-fund/us-equity-funds/tax-advantaged-dividend-income-fund-ce-htd#objectivesStrategy 

HTD Analysis by Nick Ackerman: 

https://armchairincome.link/HTD 

CEF Connect Charts: 

https://www.cefconnect.com/fund/HTD

QQQI: Increased from 4.06% to 5%

I’ve been gradually building a QQQI position, watching to see if it performs in a similar fashion to its more well established sister fund, SPYI. So far, so good.