asset-income – Scalper1

Nuveen’s Real Asset Income And Growth Fund: Possible 25% Total Return In 1 Year

Summary In January 2014, Nuveen’s Real Asset Income and Growth Fund had a distribution rate of 9.61%, monthly distributions, and was trading at a discount to market price, and was discounted further than the 3-year discount average. Those three fund characteristics have come back, which is what prompted me to write this article. Bottom line, JRI has approximately 25% of total return for investors, assuming the market realizes the market opportunity, total distributions, and narrowing discount to the fund’s net asset value. Most investors have realized by now that the situations in Greece and China have created overhangs on broader stock markets, including the U.S. markets. Even though most investors are looking at impacted portfolio performance, there are opportunities to rotate their assets out of equity stocks of companies and into securities that invest in equities and bonds of securities of global real asset-related companies. Nuveen’s Real Asset Income and Growth (NYSE: JRI ) fund does exactly that, invests in global real asset-related companies. Given that real assets have the tendency of reacting in a less volatile manner to market overreactions, the assumption is that they make good investments during times like these with China, Greece, Puerto Rico, and potentially Iran flooding the market with headline-grabbing issues. This article will be focused on JRI rather than parroting the media on the geopolitical events that have recently stormed the market. About a year and a half ago, I put out my first analysis of JRI ( found here ), and I wanted to reiterate some of my findings at the time. In January 2014, JRI had a distribution rate of 9.61%, monthly distributions, and was trading at a discount to market price, and was discounted further than the 3-year discount average. Those three fund characteristics have come back, which is what prompted me to write this article. Below I will layout my investment case for investors seeking relief from the market’s current volatility, and highlight the opportunity for JRI’s large dividend distributions. JRI’s Discount is a Buying Opportunity – An opportunity that has not come up in nine months… (click to enlarge) Source: Morningstar.com JRI Could Yield over 16% in the next 12 months – JRI’s dividend distributions are primarily composed of fund income from real asset investments, and the short-term and long-term capital gains are a bonus that most investors overlook when considering the fund. JRI distributes 13 cents per month, and when annualizing the dividend value and dividing by the trading price, you get approximately 9% of yield. Based on the chart below, JRI has managed to distribute gains on investments in excess of the 9% yield, meaning an investor could end up collecting approximately 16% of total dividend distributions assuming they hold for 12 months and through December or January of each year when the capital gain dividend is paid out (the 16% distribution is assuming no dividend reinvestment takes place, meaning the return could be even higher if dividend distributions are reinvested as they come in). The 16% yield figure is also assuming that 2015 distributions are in the same range as 2014 distributions of $1.614 of fund income, $1.074 of short-term capital gains, and $0.101 of long-term capital gains. The monthly distributions of fund income are expected to come in as planned; the capital gains distributions are the bonus. Distribution Composition is Very Attractive – The Capital Gains are a bonus to fund holders, in addition to monthly distributions… Source: Morningstar.com JRI is Focused on Real Estate and Utilities-backed hard assets – This is the source of the stable monthly income and explains the capital gains on positions that turned out to be favorable for total returns. (click to enlarge) Source: Morningstar.com Bottom line, JRI has approximately 25% of total return for investors assuming the market realizes the market opportunity (driving the trading price up to normal trading levels), total distributions (fund income + capital gains), and narrowing discount to the fund’s net asset value (gives new investors a buffer for downside). The capital gain dividend is a data point many investors overlook when browsing through closed-end fund investments, and this opportunity gives investors access to large distributions and capital stability. Disclosure: I am/we are long JRI. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

February 2015: Funds In Registration

By David Alphacentric Bond Rotation Fund Alphacentric Bond Rotation Fund will pursue “long-term capital appreciation and total return through various economic or interest rate environments.” They’ll rotate through two to four global bond ETFs based on their judgment of the relative strengths of various bond sectors. The fund will be managed by Gordon Nelson, Chief Investment Strategist, and Tyler Vanderbeek, both of Keystone Wealth Advisors. The expense ratio will be 1.39% and the minimum initial investment for the no-load “I” class shares is $2,500, reduced to $100 for accounts set up with an automatic investing plan. Alphacentric Enhanced Yield Fund Alphacentric Enhanced Yield Fund will seek current income by investing in asset-backed fixed income securities. While it expects to invest over 25% in residential mortgage-backed securities, it can also pursue “securities backed by credit card receivables, automobiles, aircraft, [and] student loans.” It might also invest in Treasuries or hedge the portfolio by shorting. The fund will be managed by a team from Garrison Point Capital, led by Tom Miner. Expenses are 1.74%. The minimum investment for the no-load “I” class shares is $2,500, reduced to $100 for accounts set up with an automatic investing plan. AMG Trilogy Emerging Wealth Equity Fund AMG Trilogy Emerging Wealth Equity Fund will seek long-term capital appreciation by investing in firms whose earnings are driven by their exposure to emerging markets. That might include firms domiciled in developed countries, as well as emerging ones. They can invest in both equities and derivatives and they anticipate building an all-cap portfolio of 60-100 securities. The fund will be managed by a team from Trilogy Global Advisors. The initial expense ratio is 1.45% after waivers and the minimum investment will be $2,000. Columbia Multi-Asset Income Fund Columbia Multi-Asset Income Fund will primarily seek high current income and secondarily, total return. They can invest in pretty much anything that generates income, there’s no set asset allocation and the portfolio doesn’t exactly explain what they’re looking for in an investment. If you have reason to trust Jeffrey Knight, the lead manager, and Toby Nangle, go for it! The expenses are not yet set. The minimum investment for “A” shares will be $2,000. Though the “A” shares carry a load, most Columbia funds are no-load/NTF at Schwab and, likely, other supermarkets. DoubleLine Strategic Commodity Fund DoubleLine Strategic Commodity Fund will seek long-term total return by having (leveraged) long exposure to commodity indexes with selective long or short exposure to individual commodities, indexes or ETFs. Then, too, it might turn market neutral. The disclosure of potential risks runs to 13 pages, single-spaced. It will be managed by Jeffrey J. Sherman of DoubleLine Commodity Advisors. Expenses are not yet set. The minimum investment is $2,000. Frontier MFG Global Plus Fund Frontier MFG Global Plus Fund will pursue capital appreciation by investing in 20-40 high-quality companies purchased at attractive prices, both in the US and elsewhere. There will be a macro-level risk overlay. The fund will be managed by Hamish Douglass, of the Australian firm Magellan Asset Management. Mr. Douglass has managed a perfectly respectable global fund for Frontier since 2011. The expense ratio for “Y” shares will be 1.20% and the minimum investment will be $1,000. Sit Small Cap Dividend Growth Fund Sit Small Cap Dividend Growth Fund mostly seeks income that’s greater than its benchmarks (the Russell 2000) and that is growing; it’s willing to accept some capital appreciation if that comes along, too. The Russell 2000 currently yields 1.29%. The plan, not surprisingly given the name, is to invest in “dividend paying growth-oriented companies [the manager] believes exhibit the potential for growth and growing dividend payments.” The portfolio will be mostly domestic. The lead manager will be Roger Sit. Expenses for the “S” class will be 1.50% and the minimum initial investment will be $5,000. Vanguard Tax-Exempt Bond Index Fund Vanguard Tax-Exempt Bond Index Fund will track the Standard & Poor’s National AMT-Free Municipal Bond Index. Adam Ferguson will manage the fund. The expense ratio will be 0.20% and the minimum investment will be $3,000. The Admiral share class will drop expenses to 0.12% with a $10,000 minimum. Virtus Long/Short Equity Fund Virtus Long/Short Equity Fund will seek total return by investing, long and short, in various sorts of equities including MLPs and REITs. The fund will be managed by John F. Brennan, Managing Director at, and cofounder of, Sirios Capital Management. The minimum initial investment will be $2,500. The expense ratio has not yet been announced. Though the “A” shares carry a load, most Virtus funds are no-load/NTF at Schwab and, likely, other supermarkets.