Because we strive to be diversified and hold assets with margins of safety, many of our positions — such as our closed-end funds — held up well in the recent downturn, notes ETF and mutual fund expert Bob Carlson, editor of Retirement Watch.
Cohen & Steers Infrastructure (UTF) declined 4.43% over the last four weeks and is down 3.03% for the year to date. But the fund’s portfolio did better than its shares. The net asset value was down only 2.68% over the last four weeks and 2.61% for the year to date.
The fund is selling at a greater discount to net asset value than it was before the decline and is more of a value today. The recent discount was 6.77%, compared to a six-month average of 5.77%.
UTF invests in all types of infrastructure companies around the globe. It intends to benefit from the longterm expenditures that will be made in telecommunications, transportation, utilities, airports and other types of infrastructure.
he recent distribution yield was 8.50%. Sometimes the fund makes return-of-capital distributions, but it hasn’t done that in 2017 or 2018. Real estate investment trusts (REITs) fared worse than the market averages in the downturn.
Cohen & Steers REIT & Preferred Income (RNP) is a closed-end fund that is invested about 50% in real estate investment trusts (REITs) and 50% in preferred securities. The fund is down 9.98% for the last four weeks and 10.30% for the year to date. But its portfolio also did much better than its share price.
The net asset value is down only 5.93% in the last four weeks and 4.32% for the year to date. As with UTF, the fund is a better bargain now. It is at a 13.09% discount to net asset value, compared to a 10.90% six-month average discount. The distribution yield is 8.27%. In recent years, including 2018, a portion of the distributions were return of capital.
A similar slide was experienced by Cohen & Steers Realty Shares (CSRSX). The fund is down 7.46% for the last four weeks and 3.47% for the year to date. The decline increases the yield to 3.15%.
REITs had been recovering well from a 2017 downturn and were leading markets higher the last six months before they peaked in late August. It is normal for REITs to be more volatile than the market indexes, but I’ll be re-evaluating the REIT positions in the coming weeks.
