Get a "Retirement Paycheck" with these Closed-End Funds

02/19/2020 5:00 am EST

Focus: FUNDS

Robert Carlson

Editor, Retirement Watch

I created the Retirement Paycheck portfolio for investors who primarily want income from their investments but couldn’t earn adequate payouts from traditional retirement income investments, explains income expert Bob Carlson, editor of Retirement Watch.

The portfolio expands the investment universe to include closed-end funds, preferred securities, high-yield bonds, energy pipelines, emerging market bonds and more.

The portfolio holds both preferred securities and real estate investment trusts (REITs) through Cohen & Steers REIT & Preferred Securities (RNP). This closed-end fund uses about 23% leverage.

The recent yield was 5.95%. None of the 2019 distributions included return of capital, but distributions did in the three previous years. The discount to net asset value is 1.73%, which compares to the six-month average discount of 2.95%.

Another closed-end fund and the most recent addition to the portfolio is TCW Strategic Income (TSI). This fund doesn’t use any leverage. TSI can invest in any fixed-income security issued anywhere in the globe. But it concentrates on quality mortgages and corporate bonds.

Recently, it was invested 40% in mortgage securities and 28% in investment-grade bonds. Relatively small positions in a range of other fixed-income securities formed the rest of the portfolio.

The distribution yield is 5.75%, and the fund doesn’t make return of capital distributions. The fund’s share price has been fluctuating between a small discount to net asset value and a small premium.

Subscribe to Retirement Watch here…

Related Articles on FUNDS