Top Picks 2020: Liberty All-Star Growth Fund (ASG)

01/15/2020 5:00 am EST

Focus: FUNDS

Michael Foster

Editor, BNK Invest

I continue to recommend a focus on US stocks. American companies simply have more trustworthy accounting standards, better regulations and wider global reach than some other nations, suggests Michael Foster, editor of Contrarian Outlook's CEF Insider.

For example, Beijing’s numbers aren’t always what they appear to be. Big economic numbers can be manipulated, but credit markets can’t, and China’s bond market looks frightful.

This is where the beauty of closed-end funds (CEFs) comes in, because they let you hedge your bets, collecting a large slice of your return in cash, thanks to their high dividends, like the 7.7% paid by the US-equity-focused Liberty All-Star Growth Fund (ASG). 

Large payouts like that also mean you could live on dividends alone, if you’re looking to your portfolio for income, and tune out the market’s ups and downs, because you won’t have to sell any stocks to generate cash.

ASG’s portfolio is a mix of large-cap US stocks like Microsoft (MSFT), Alphabet (GOOGL) and Yum! Brands (YUM), as well as small- and mid-cap plays like property manager FirstService (FSV) and education-technology firm Chegg Inc. (CHGG).

It’s a recipe that’s easily beaten not only the China-focused CEFs — with over four times their total returns in the last decade — but the S&P 500, as well.

Remember, much of this return was in cash, thanks to ASG’s large (monthly) dividend. And that payout will continue to provide a nice hedge for ASG investors (as well as a high-income stream) through the market’s ups and downs over the coming decade, as well.

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