Post by Deleted on Jul 2, 2022 18:17:50 GMT
From Fidelity:
"CEFs have an underlying portfolio of securities. From this portfolio, a net asset value (NAV) can be derived [NAV = (assets − liabilities) ÷ shares outstanding].
The investment portfolio primarily, if not solely, comprises the assets. For leveraged CEFs, the leverage itself is the bulk of the liabilities. CEFs trade on an exchange. This means that they have a share price, which is set by the market. These 2 prices, the NAV and the share price, are rarely the same, and when they are, it's only by coincidence."
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So the mystery of PIMCO CEFs' recently decreasing NAVs (note: NAVs did increase on 7-1-22) is that the market asset prices of their bonds were decreasing (yields increased). And the liabilities were subtracted from the reduced market assets values.
"CEFs have an underlying portfolio of securities. From this portfolio, a net asset value (NAV) can be derived [NAV = (assets − liabilities) ÷ shares outstanding].
The investment portfolio primarily, if not solely, comprises the assets. For leveraged CEFs, the leverage itself is the bulk of the liabilities. CEFs trade on an exchange. This means that they have a share price, which is set by the market. These 2 prices, the NAV and the share price, are rarely the same, and when they are, it's only by coincidence."
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So the mystery of PIMCO CEFs' recently decreasing NAVs (note: NAVs did increase on 7-1-22) is that the market asset prices of their bonds were decreasing (yields increased). And the liabilities were subtracted from the reduced market assets values.