The Guggenheim Strategic Opportunities Fund (GOF) is a closed-end fund that focuses on delivering steady income to investors every month, explains Jason Williams, editor of The Wealth Advisory.
It accomplishes this goal by investing in various financial instruments that pay out income. Its portfolio consists of bank loans, high-yield corporate debt, investment-grade bonds, asset-backed securities, preferred stock, municipal bonds, and other income-paying securities. It charges an expense ratio of 1.83% of assets under management (AUM).
The fund has a net asset value of about $17 per share and trades at a premium to that NAV of about 14%. The historical premium to NAV is around 13.66%. When a fund is trading at more of a discount than usual (or less of a premium) it represents a good buy.
But that’s not the only thing we can use to determine the best times to enter a CEF. These kinds of investments usually trade in a very tight channel.
When a CEF is at the top of that channel, it’s likely at the top of its price range and won’t go much higher. And conversely, when a CEF is toward the bottom of its channel, it can be a great time to buy so you can add capital appreciation to your income. That’s where we find ourselves with the Guggenheim Strategic Opportunities Fund.
Ignoring a couple of market crashes, this fund likes to trade in a range between $18 and $22. It’s dipped down as far as $15 during crashes, but it’s always come back up to its preferred range. And right now it’s sliding down toward the bottom of that range. And it’s looking like a very attractive buy.
There’s a chance it could fall further, but it’s not likely to fall much further than $15. And it’s got that sweet 11% payout (that comes every single month) to make up for any short-term stumble it might take. We’re adding the Guggenheim Strategic Opportunities Fund to the model portfolio with a buy limit of $19.50 and a 12-month price target of $22.50.
