|
Post by retiredat48 on Mar 17, 2023 3:55:27 GMT
Newest coverage numbers not good generally, just marginally better than before, but PDI remains surprisingly poor, again below its cousin PDO. PHK and PAXS doing OK. R...there has been considerable discussion on fido forum about this quick PDI lag in UNNI. The surmising is that this has to do with PIMCO buying things like swaps, etc, that may forfeit the current interest on a bond, in exchange for a cap gain later...like in November. But PIMCO cannot count this as income yet. Just as we saw a quick drop in monthly earned income, we may see the same jump in later part of year. It is similarly why they can sometimes (often)pay a great yr end (Dec) special dividend. It does not show up until positions closed. Very technical--yes. It is why there is a degree of "black box" in the PIMCO investing within PDI. R48
|
|
|
Post by richardsok on Mar 17, 2023 12:50:36 GMT
Newest coverage numbers not good generally, just marginally better than before, but PDI remains surprisingly poor, again below its cousin PDO. PHK and PAXS doing OK. R...there has been considerable discussion on fido forum about this quick PDI lag in UNNI. The surmising is that this has to do with PIMCO buying things like swaps, etc, that may forfeit the current interest on a bond, in exchange for a cap gain later...like in November. But PIMCO cannot count this as income yet. Just as we saw a quick drop in monthly earned income, we may see the same jump in later part of year. It is similarly why they can sometimes (often)pay a great yr end (Dec) special dividend. It does not show up until positions closed. Very technical--yes. It is why there is a degree of "black box" in the PIMCO investing within PDI. R48 Thanks, r--- You're correct, of course. As these CEFs do operate legions of complexity beyond my high school-level of understanding, I agree we should not draw clear conclusions from month-to-month data. Still, the numbers ARE the numbers, however much there is we also DON'T know. As ever, I try not to have opinions; only observations.
|
|
|
Post by anitya on Mar 17, 2023 18:47:57 GMT
|
|
rumi
Ensign
Posts: 40
|
Post by rumi on Mar 18, 2023 7:59:10 GMT
No. it's been more common in the last 2-3 years or so. Before that PDI regularly had full coverage, so did PTY.
How many years have you been following the coverage ratio of PDI and PTY? These funds are respectively 10 and 20 yrs old. I wish we could see PTY's PIMCO UNII reports from back in 2008, 2009, or the years thereafter/before, to see what coverage numbers they printed then.
|
|
|
Post by johnsmith on Mar 18, 2023 11:34:06 GMT
No. it's been more common in the last 2-3 years or so. Before that PDI regularly had full coverage, so did PTY.
How many years have you been following the coverage ratio of PDI and PTY? These funds are respectively 10 and 20 yrs old. I wish we could see PTY's PIMCO UNII reports from back in 2008, 2009, or the years thereafter/before, to see what coverage numbers they printed then. I started with PDI, PTY, RCS around 2013 so it’s been quite a few years.
|
|
|
Post by retiredat48 on Mar 18, 2023 15:32:55 GMT
If it helps any, it has been posted on the fido forum that PDI has never cut its dividend. And often pays out a year-end special dividend bonus. Not saying PDI will not cut its divy now...
R48
|
|
|
Post by archer on Mar 20, 2023 22:53:40 GMT
If it helps any, it has been posted on the fido forum that PDI has never cut its dividend. And often pays out a year-end special dividend bonus. Not saying PDI will not cut its divy now... R48 Operating as a CEF, can you or anyone opine as to how PDI follows the interest rate:duration rule? I bought some last year and while I appreciate reinvested dividends at lower prices, I'm not seeing a lot of reason to continue holding it when there is likely more money to be made elsewhere. If I can reasonably expect price improvement as the fed levels off I don't mind holding onto it, but if is less likely than other bond based assets to rise when interest rates come down, I'm of a mind to sell. When I say "operating as a CEF" I am thinking that it differs than standard bond funds in that people's reason for buying are often different than for standard bond funds.
|
|
|
Post by retiredat48 on Mar 21, 2023 4:50:39 GMT
If it helps any, it has been posted on the fido forum that PDI has never cut its dividend. And often pays out a year-end special dividend bonus. Not saying PDI will not cut its divy now... R48 Operating as a CEF, can you or anyone opine as to how PDI follows the interest rate:duration rule? R48 in bold: OK. Let's take one class of investments PDI makes...mortgages. PDI has accumulated tranches of home mortgages, let's say some at 3.75% yield. Average mortgage is held 7 years, so avg duration is lets say 7 years. Comes a time, now, that mortgages go to 6.5%. Based on mark-to-market rules, PDI will lower prices of its underlying mortgages. Further, homeowners are now "locked in"...cant sell to buy a better home, giving up a 3.75% rate for a new 6.5% one. Thus the avg duration is INCREASED from a practical standpoint.
Another however, though, is that same homeowners will not default on the mortgage that is on greatly appreciated property. Will not go into foreclosure. So quality increases. Lastly, when the mortgage is eventually paid off at any time, there is no mark-to-market discount--PAYOFF IS REQUIRED AT FULL FACE VALUE. So a built in gain exists longer term. And as each mortgage is paid PIMCO can now invest in a new mortgage at 6.5% or current rates at that time. I bought some last year and while I appreciate reinvested dividends at lower prices, I'm not seeing a lot of reason to continue holding it when there is likely more money to be made elsewhere. R48: Where?? Where can you get 13+% divy yields? If I can reasonably expect price improvement as the fed levels off I don't mind holding onto it, but if is less likely than other bond based assets to rise when interest rates come down, I'm of a mind to sell. When I say "operating as a CEF" I am thinking that it differs than standard bond funds in that people's reason for buying are often different than for standard bond funds. The reason to own is to have a PORTION of ones portfolio in higher yielding fixed income, including junk bond funds, preferred share funds, and in this case leveraged FI CEFs that can be held longer term.
Not for everyone, but I offered a wager that in the next five years, PDI (divy's reinvested) WILL BEAT OR BETTER ANY other investment fund you would like to choose, including SPY. Got no takers. Bet is still offered.
good day...
R48 in bold
|
|
|
Post by archer on Mar 21, 2023 6:25:55 GMT
Operating as a CEF, can you or anyone opine as to how PDI follows the interest rate:duration rule? R48 in bold: OK. Let's take one class of investments PDI makes...mortgages. PDI has accumulated tranches of home mortgages, let's say some at 3.75% yield. Average mortgage is held 7 years, so avg duration is lets say 7 years. Comes a time, now, that mortgages go to 6.5%. Based on mark-to-market rules, PDI will lower prices of its underlying mortgages. Further, homeowners are now "locked in"...cant sell to buy a better home, giving up a 3.75% rate for a new 6.5% one. Thus the avg duration is INCREASED from a practical standpoint.
Another however, though, is that same homeowners will not default on the mortgage that is on greatly appreciated property. Will not go into foreclosure. So quality increases. Lastly, when the mortgage is eventually paid off at any time, there is no mark-to-market discount--PAYOFF IS REQUIRED AT FULL FACE VALUE. So a built in gain exists longer term. And as each mortgage is paid PIMCO can now invest in a new mortgage at 6.5% or current rates at that time. I bought some last year and while I appreciate reinvested dividends at lower prices, I'm not seeing a lot of reason to continue holding it when there is likely more money to be made elsewhere. R48: Where?? Where can you get 13+% divy yields? If I can reasonably expect price improvement as the fed levels off I don't mind holding onto it, but if is less likely than other bond based assets to rise when interest rates come down, I'm of a mind to sell. When I say "operating as a CEF" I am thinking that it differs than standard bond funds in that people's reason for buying are often different than for standard bond funds. The reason to own is to have a PORTION of ones portfolio in higher yielding fixed income, including junk bond funds, preferred share funds, and in this case leveraged FI CEFs that can be held longer term.
Not for everyone, but I offered a wager that in the next five years, PDI (divy's reinvested) WILL BEAT OR BETTER ANY other investment fund you would like to choose, including SPY. Got no takers. Bet is still offered.
good day...
R48 in boldThanks 48. I follow your reasoning. I do disagree though with the "R48: Where?? Where can you get 13+% divy yields?" thinking. My question is where is PDI getting the 13%? It's coming from the value of the fund! I can take 13% from cash and call it income. And, I can reinvest it at higher MM rates. But this is just taking us down the bottomless TR vs income rabbit hole. I am encouraged though that you expect PDI TR to exceed SPY in 5 yrs. I'm only holding it at 5% of my PF, so I'm not overly concerned, but, If I had it to do over I would buy in 6 months from now rather than 9 months ago as I did. My PDI is down over 10% from then till now and SPY down 3.5%, all divs reinvested.
|
|
|
Post by uncleharley on Mar 21, 2023 12:37:18 GMT
|
|
|
Post by archer on Mar 21, 2023 15:08:37 GMT
PDI appears to be pretty far removed from Switzerland. Lowest of top four countries in PDI's PF is Italy at 2.5%ish.
|
|
|
Post by retiredat48 on Mar 22, 2023 1:00:28 GMT
archer ,...who posted: "Thanks 48. I follow your reasoning. I do disagree though with the "R48: Where?? Where can you get 13+% divy yields?" thinking. My question is where is PDI getting the 13%? It's coming from the value of the fund! I can take 13% from cash and call it income. And, I can reinvest it at higher MM rates. But this is just taking us down the bottomless TR vs income rabbit hole." -------------- I don't think this is correct. If you take from cash and use it for dividends, it is RETURN OF CAPITAL. Further I think PIMCO and PDI had no ROC for last years dividends. Lastly, it has been posted by others and likely the case: If you think PIMCO is playing shenanigans here, doing something unlawful or not in accordance with accepted accounting rules, the question becomes WHY WOULD THEY? Why jeopardize their billions and billions of asset deposits with them? For a measily small CEF? R48
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Mar 22, 2023 2:35:06 GMT
|
|
|
Post by gman57 on Apr 3, 2023 23:43:56 GMT
|
|
|
Post by richardsok on Apr 4, 2023 1:00:29 GMT
Thanks gman. Whenever we start discussing these funds, we always seem to fall back on, "Well, maybe they're doing THIS...." or "Possibly THAT is going on because...." I think we can all agree there are multiple unknowns with these CEFs. With their most recent coverage numbers in mind, I think it is very possible we could see some distrib cuts ahead but very unlikely to see disty increases. IOW, I surmise the taxables here have more potential sudden downsides than plausible big rallies.... unless coverage improves greatly in 2-3 weeks. PDI's numbers practically demand either a cut or vastly improved earnings. Of course, it is beaten down so low that even after a cut you'd still likely be getting 9-10% yield. My take -- watch and buy either on the CUT or on the coverage leap. So, for my part, I'm exactly where I want to be with Pimco -- constantly watching but only occasionally owning. These are trading assets, not long-term holds, IMO. The only position I own is a big recently bought block of PAXS. For anyone who disagrees, consider PDI's two-year performance. tinyurl.com/ms6umj84
|
|
|
Post by steelpony10 on Apr 4, 2023 11:26:12 GMT
One could forget the paralysis by analysis (every investment has issues and risk, investing 101) when it’s factually obvious you can get all your investment back in 5-7 years (72/14%+). Just take the money $1400/10000 which even with cuts is way above your personal inflation rate and present general rates. We started in 2008-10 and it doesn’t hurt. One is gambling on future values no matter what the scheme or investment. The only way to possibly beat that return over a long period is if Mr. Market smiles on you again some day long term.
|
|
|
Post by uncleharley on Apr 4, 2023 13:44:03 GMT
PIMCO april distys payable May1 are out. It looks like no changes in their monthly distributions for April.
|
|
|
Post by archer on Apr 4, 2023 15:51:46 GMT
One could forget the paralysis by analysis (every investment has issues and risk, investing 101) when it’s factually obvious you can get all your investment back in 5-7 years (72/14%+). Just take the money $1400/10000 which even with cuts is way above your personal inflation rate and present general rates. We started in 2008-10 and it doesn’t hurt. One is gambling on future values no matter what the scheme or investment. The only way to possibly beat that return over a long period is if Mr. Market smiles on you again some day long term. In the time I have owned PDI, it is down 9.34% with dividends reinvested. It's performance is affected by manager decisions on buys/sells, interest rates affecting its bonds as well as rates on leverage. With these fluctuation affects which can't be predicted, how can the rule of 72 or any rule be reliable? My understanding is that it only applies to fixed interest rates like for an individual bond or CD. and also isn't as accurate for rates around 6% or higher. If this rule is sound we can accurately predict what the TR will be in 5-7 years with divs reinvested, and thus what the price will be assuming divs don't change, as well as what it will do in the meantime. Can we look back at the price 5 years ago and predict what it will be next year with reasonable accuracy?
|
|
|
Post by retiredat48 on Apr 13, 2023 4:57:03 GMT
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Apr 13, 2023 7:31:54 GMT
retiredat48, 1) There are recent posts here in BB-land about how to access SA articles without a SA subscription. Whether the techniques described work correctly for someone else in their computing environment, or whether the techniques described still work considering that SA may have tighten up on access, I don't know. 2) I try not to offer investing or market advice/predictions and I especially do not want to do so from someone else. But I will make an observation that Dick recently has been pointing out in good fashion several obvious points relative to an income-investor, a) that even with a distribution cut a FI CEF likely still offers an attractive distribution when compared to other products and b) to remember that equity CEFs are dependent on cap-gains to a varying degree for their distributions and thus to beware of a ROC condition for them in a flat/declining market. And ... I remember but did not save (perhaps you did) Dick's thoughts years ago in M* about how/why he decided that bond-ish CEF investing was the best investing answer for him in his retirement. He has also said that he's trading less often now for personal, not market, reasons. Nevertheless, I will share one recent informative Cod-comment about two real estate equity CEFs. If in doing so I am in offense of something or somebody, I apologize and will try to make amends. " Hi Nick. You do a good job of alerting investors that RQI and similars rely very heavily on gains to supplement modest NII. Of course, RQI has "traded for its supper" very successfully for years, BUT investors also should not confuse these products with typical bond-ish income CEFs where NII is usually close to over the distribution. In the end, RQI and similars do rely on periodic market advances to capture those gains they need to supplement NII for robust distributions. At 12/31, RQI had over $2/share of distributable earnings/"saved up gains" that will supplement NII for a long time. But because it was launched more recently, RLTY is in a far different situation. It shares the superb leverage cost hedges with other CEFs in the C&S family, but at 12/31, RLTY had NEGATIVE distributable earnings / losses of nearly $4/share. Consequently, RLTY will be distributing destructive ROC for a long time --- until managers can trade out of the $4/share hole and capture additional gains. That will certainly be a long time coming under the best of circumstances, and I'd be concerned that RLTY will perform rather poorly for a long while --- not because the managers lack skill, but simply because of bad luck in launch timing. Regards, Dick " --- Frank
|
|
|
Post by steelpony10 on Apr 13, 2023 10:51:43 GMT
archer My experience is bond types trade in a range, CEF’s more so because of limited shares, leverage etc. I have no idea when or how an unknown became predictable which is why I don’t trade or market time. I found ways that I believe are way easier and safer to make money. As an income investor only and to meet our goals, 12 CEF’s distributing in a range of 8-10% over time is way easier to manage as I age or pass to a successor then 36 dividend payers (3%) at 3 times the investment to equal the same cash flow. As a bonus I don’t attach cap gains to cash flow either. Cap gains are secondary and totally out of my hands in the short term, which I still believe is unknown. Starting in 2009-10 we’ve received 60% or more of our initial investment back that now mostly sits idle in VTI waiting for Mr. Market to provide some cap gains. If there is a recession coming up the average recovery is 2.5 years which takes us to 2026-2027? I don’t care about values at all and disperse any extra distributions constantly to areas on reinvestment or cash. Those funds will go to our kids or for LTC, so values are theirs. If you’re a spend down investor try spending down equities for maybe the next 4 years or living on standard bond interest in a 5% inflationary environment. I would load up on PDI during this great sale and if distributions are cut so what? I think I saw you sold PDI so a value drop of $900+/10k (9%)? spooked you but maybe distributions per year higher then that weren’t considered. We’re about 10% down in values since we started but have received about 14 times that back including our own investment and someone elses money (ROC). I know I need the muni and cash but I wonder why I’m waiting on VTI. For us it took about 1/3 the investment to become reasonably financially secure and have predictable cash flow above the worse near historical inflation rates during Stagflation. I think once one can separate equity type thinking from income type thinking and stop trying to micromanage daily and long term unknowns investing is much easier. My opinion is both equity and income investing depends on management dealing with facts (managing) as they present themselves, not the past or unknown future. Equities provide cap gains 7/10 years to spend down but the process has lulls and cap gains occur in unknown amounts. Dividends, distributions etc. provide continuous income of varying amounts in all markets but no or small cap gains (dividend holdings). I took what I thought was the easy more sure retirement solution for us.
|
|
|
Post by richardsok on Apr 13, 2023 14:08:15 GMT
Your post was a mini-education in itself, frank. Much thanks.
Rather ironically, just the other day I argued RLTY was a better choice than RIET because it offers far better liquidity.
|
|
|
Post by Chahta on Apr 13, 2023 14:39:33 GMT
steelpony10 , archer ; What if you are the poor soul that bought PDI at $30? That would be a "drawdown investor" that may never see their principal again.
|
|
|
Post by archer on Apr 13, 2023 15:15:12 GMT
Here is a link to some interesting info on PDI performance. The chart at the bottom of the page gives an idea of it's tax efficiency which is sobering. But, held in a tax advantaged account makes this a moot point. Another chart shows how it faired in the 2022 downturn compared to SPY, which isn't too shabby had you bought in at the beginning of '22. This chart is with divs reinvested.
|
|
|
Post by retiredat48 on Apr 13, 2023 19:53:31 GMT
@fpajerski,...Thanks!
R48
|
|
|
Post by steelpony10 on Apr 13, 2023 20:10:26 GMT
Chahta , Add ip all the distributions from when PDI was priced at 30. We’ve had ours since inception and the 2 that were merged into it, PCI and PKO. So 10 years plus at 9% distributions so $900/10k = $9000, with just PDI. Ours is down on cost about 15% which = $7600 if I sold out. I’m not so I have $9000. Our whole group is down on cost about 11%. We hold 12. With 55% of our portfolio in reserve under what conditions would I sell CEF’s? That would be as a last resort. How’s are equities and standard bonds doing by comparison? Waiting for Putin to die, inflation to settle, the “mild recession” supposedly, rates to drop, dealing with the Chinese etc.? You might be 80 years old and complaining about the price of gas station coffee. Lol.
|
|
|
Post by richardsok on Apr 13, 2023 21:03:10 GMT
Just picked up an insider buy of PAXS; Stracke acquiring another 7000sh bringing him up to 74,000sh total.
|
|
|
Post by rhythmmethod on Apr 13, 2023 21:33:30 GMT
steelpony10 , @chahta I'm on board with pony here. At about 15% CEFs and 10% PIMIX I more than meet my income needs. Still hold sleepy VWAIX, VWENX, SCHD, SCHY and several others. As time goes by my AAPL, MSFT, AMZN, etc are more for entertainment. I could see folding all that other equity stuff in VTI but what would I do with all that free time. Take care! RM
|
|
|
Post by steelpony10 on Apr 13, 2023 22:31:50 GMT
rhythmmethod , I’m really posting about how one views bonds and equities. One should have both probably with some safe money. Three distinct income investments each with good and bad points. Bonds (or dividends) are a bridge between rising markets, the landing to the next step up. If I can’t see the next step up this is my answer while I wait. I do see we’re on the same page. Easy peasy.
|
|
|
Post by Chahta on Apr 13, 2023 23:47:24 GMT
steelpony10 , rhythmmethod , I get it since I own PTY. My only point was in January 2020 one could have paid $33 for PDI. Since then it has yielded about $6. Today the price is about $18. That is a long way to go to recover. When we talk about "spend down" investors we overlook the "drawn down" investors, which really is spend down too. The poor guy that paid $33 and is spending his $6 in yield may never see his principal again. I am lucky because I am not using the PTY yield and will recover any cost before I need it plus pump up the income.
|
|