In mid March (and again last week) I mentioned exiting some closed-end funds (CEFs) selling above net asset value (NAV) and buying back some of the oil and gas trusts and LPs. In 2007 and 2008 I had owned most of the US oil and gas trusts featured in McDep Report. Through adding on and trading the rallies in 2008 and early 2009 I managed to exit them basically breakeven. As their payouts began to come back this year from sub 5% levels I started buying them on minor weakness, and at the same time, up until two weeks ago, I gradually got rid of all of the ten CEFs I had owned except for two global bond funds, AWF and SBW.
I also trimmed back on several of the stock mutual funds like OAKBX and FPACX, and added to the Canadian silver and gold trusts CEF and PHYS on days when they were both down and under 10% premiums to NAV. (CEF goes into the tax-deferred funds and PHYS into the taxable fund.)
I already had DMLP in a taxable fund and added oil and gas trusts HGT, MTR and SJT in the tax-deferred accounts. All four have appreciated nicely, and I have been re-investing the dividends in them. Based on total cost they are now paying over 9% and have proved to be worthy replacements for the CEFs. Also as I have mentioned I have added the general partnership entities of ETE, EPE, and NSH in taxable accounts with the idea of keeping them a long, long time if possible, and added the Vanguard energy and mining funds VGENX and VGMX several months ago. All of these entities have done well so far.
Apart from getting rid of the high yield closed-end bond funds, I haven't yet made any changes in bond mutual funds VWETX, LSBDX, and PTTRX, and I still have quite a bit of cash in money market funds. I have added to monthly payer CMO PrB paying over 9%. I still have quite a lot in the Vanguard intermediate term municipal bond fund VWIUX which makes me nervous when I read all the terrible news about US cities and states. At some point I am going to have to cut that exposure way back. Some days I think that much of the munis will go into gold if there ever is a major selloff in gold.
Despite the volatility of the past week the the all account totals for the year (including all cash and gold) made a new high of 5.03% on Friday, annualized at 15.09%, which is higher than last year's total 14.31%. Of course there's no guaranteee I'll end the year that far ahead, and I'm frankly surprised to see it now since there were so many predictions that returns would be more muted this year. By fine-tuning higher yield instruments, selling back individual securities when they rise 15-25% and adding on when they sink similar amounts, and by keeping a good portion in cash, and in short to intermediate term bond funds and gold I am able to keep volatility down and make a modest but steady return. If one has built up a decent estate over the years a low volatility modest return can provide both a good income and inflation hedging. That's really the goal for most people investing "for" and then "in" retirement.
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