{"id":8520,"date":"2023-05-14T09:22:39","date_gmt":"2023-05-14T13:22:39","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/usa-cef-10-yield-growth-and-value-vs-asg-9-yield-growth-fund\/"},"modified":"2023-05-14T09:22:41","modified_gmt":"2023-05-14T13:22:41","slug":"usa-cef-10-yield-growth-and-value-vs-asg-9-yield-growth-fund","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=8520","title":{"rendered":"USA CEF: 10% Yield, Growth And Value, Vs. ASG 9% Yield Growth Fund"},"content":{"rendered":"
\n
<\/picture>
<\/figcaption><\/figure>\n

Searching for viable high-yield income vehicles in 2023?<\/p>\n

Closed-end funds generally offer high dividend yields, but buying them has an interesting wrinkle. As CEFs have a fixed amount of shares, they can sell at premiums or discounts to their net asset values – NAVs.<\/p>\n

Their NAV\/share is calculated at the end of each day, giving investors the current premium or discount the CEF is selling for. A useful strategy when buying CEFs is to try to buy them at deeper discounts or lower premiums than their historical averages due to mean reversion.<\/p>\n

The two CEFs we’re covering in this article, Liberty All-Star Equity (NYSE:USA<\/span>) and its sister fund Liberty All-Star Growth (ASG)<\/span>, were both selling at discounts to NAV\/share, as of the 5\/11\/23 close, but ASG had a much deeper discount.<\/p>\n

USA’s -0.17% price\/NAV is cheaper than its one-year and three-year price\/NAV of 1.79% and 0.53%, but not as cheap as its five-year -1.48% price\/NAV, whereas ASG’s -4.91% price\/NAV was much cheaper than its one-, three-, and five-year average price\/NAV of -0.25%, 2.90%, and 1.50%, respectively:<\/span><\/p>\n

\"NAV\"<\/span>
\n

Hidden Dividend Stocks Plus<\/span><\/p>\n<\/figcaption><\/figure>\n

Combining a significantly lower than average price\/NAV with an oversold reading on a CEF’s long-term stochastic chart also can help you buy at the right price.<\/p>\n

USA has declined considerably from its $9-plus price in July 2021, to ~$5.95, but is ~43.6 on its long-term slow stochastic chart, not that close to the oversold bar:<\/p>\n

\"stochart\"<\/span>
\n

fnvz<\/span><\/p>\n<\/figcaption><\/figure>\n

ASG has taken a tumble all the way down to ~$5.00 since November ’21 when it was over $9.50. At ~26.40, it’s quite close to the oversold 20 threshold on its long-term slow stochastic chart:<\/p>\n

\"stocht\"<\/span>
\n

fnvz<\/span><\/p>\n<\/figcaption><\/figure>\n

Fund Profiles:<\/strong><\/p>\n

USA<\/strong> uses a multi-faceted approach to its investments, using three value portfolio managers and two growth managers with expertise in different slices of the market. Its portfolio holds 60% in value equities and 40% in growth equities.<\/p>\n

ASG<\/strong> specializes in growth equities, utilizing three managers, each focusing on either small, mid, or large market cap equities.<\/p>\n

Both funds were launched in 1986, and both pay variable quarterly distributions. USA’s policy is to pay distributions on its shares totaling ~10% of its NAV per year<\/em>, payable in four quarterly installments of 2.5% of the fund\u2019s NAV. ASG’s policy is to pay distributions on its shares totaling ~8% of its net asset value per year<\/em>, payable in four quarterly installments of 2% of the fund\u2019s NAV.<\/p>\n

USA is much larger than ASG, with $1.5B in net assets, and 823K in average trading volume. Its expenses are a bit lower, at 0.93%, vs. 1.14% for ASG, and it has 148 holdings, vs. 119 for ASG. Both funds pay quarterly.<\/p>\n

\"prfls\"<\/span>
\n

Hidden Dividend Stocks Plus<\/span><\/p>\n<\/figcaption><\/figure>\n

Dividends:<\/strong><\/p>\n

USA has a higher dividend yield, at ~10%, vs. 8.75% for ASG, whereas ASG has a much higher five-year dividend growth rate of 11.48%, vs. 6.81% for USA.<\/p>\n

With NAV’s falling, both funds trimmed their dividends in 2022.<\/p>\n

USA’s payouts declined from $.21 in Q3 2021, to $.15 in Q4 ’22. ASG’s distributions also fell from $.21 in Q3 ’21, to $.10 in Q4 ’22, and then rose to $.11 in Q1 ’23. ASG also paid a special $.34 distribution in Q4 ’21 to avoid excise tax.<\/p>\n

\"div\"<\/span>
\n

Hidden Dividend Stocks Plus<\/span><\/p>\n<\/figcaption><\/figure>\n

Taxes:<\/strong><\/p>\n

The most recent tax info from USA shows its distributions from Q4 ’21 – Q3 ’22 were characterized as 55.2% long-term capital gains, and 40.11% return of capital, with 4.69% as qualified dividends.<\/p>\n

\"tax\"<\/span>
\n

USA site<\/span><\/p>\n<\/figcaption><\/figure>\n

Holdings:<\/strong><\/p>\n

As of 3\/31\/23, USA’s top sector exposures were financials, tech, healthcare, and consumer discretionary, forming ~70% of its portfolio. Notable changes vs. 9\/30\/22 were: Financials – up ~14%; tech – down ~9%; down ~8%; and industrials – down ~4%.<\/p>\n

\"sctrs\" <\/picture>
\n

USA site<\/span><\/p>\n<\/figcaption><\/figure>\n

Since 9\/30\/22, USA’s top 10 added Booking Holdings (BKNG), ServiceNow (NOW), and Sony (SNE), while dropping Charles Schwab (SCHW), Danaher (DHR), and Dollar General (DG):<\/p>\n

\"top<\/span>
\n

USA site<\/span><\/p>\n<\/figcaption><\/figure>\n

ASG’s top five sector exposure formed ~84% of its portfolio, as of 3\/31\/23. Its biggest exposure changes were: Tech – down ~3%, healthcare – down ~2%, consumer discretionary – up ~2%, and financials – up 2.4%:<\/p>\n

\"sctrs\" <\/picture>
\n

ASG site<\/span><\/p>\n<\/figcaption><\/figure>\n

ASG’s top 10 holdings formed 16.5% of its portfolio, as of 3\/31\/23. Notable changes vs. 9\/30\/22 were: UnitedHealth (UNH), Montrose Environmental (MEG), and Globant (GLOB) came off of the top 10, and were replaced by Deckers (DECK), Workday (WDAY), and Progyny (PGNY).<\/p>\n

\"top<\/span>
\n

ASG site<\/span><\/p>\n<\/figcaption><\/figure>\n

Performance:<\/strong><\/p>\n

USA has outperformed ASG so far in 2023 and over the past year. However, both funds have trailed the S&P 500 during all of the periods listed below.<\/p>\n

\"perf\"<\/span>
\n

Hidden Dividend Stocks Plus<\/span><\/p>\n<\/figcaption><\/figure>\n

USA outperformed the Morningstar US CEF US Equity category in 2017-2021 and 2015, but lagged in 2022:<\/p>\n

\"lterm\"<\/span>
\n

cfcnt<\/span><\/p>\n<\/figcaption><\/figure>\n

ASG outperformed in 2017-2020, but lagged in 2021 and 2022:<\/p>\n

\"lterm\"<\/span>
\n

cfcnt<\/span><\/p>\n<\/figcaption><\/figure>\n

The 10-year chart shows USA outdistancing ASG by a wide margin on a total return basis:<\/p>\n

\"t<\/span>
\n

Ycharts<\/span><\/p>\n<\/figcaption><\/figure>\n

Parting Thoughts<\/strong><\/h2>\n

ASG looks like it’s better positioned for a short\/near term buy now than USA, with a deeper than average discount to NAV, and a nearly oversold reading on its stochastic chart.<\/p>\n

All tables furnished by Hidden Dividend Stocks Plus, unless otherwise noted.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Searching for viable high-yield income vehicles in 2023? Closed-end funds generally offer high dividend yields, but buying them has an interesting wrinkle. As CEFs have a fixed amount of shares, they can sell at premiums or discounts to their net asset values – NAVs. Their NAV\/share is calculated at the end of each day, giving […]<\/p>\n","protected":false},"author":1,"featured_media":8521,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-8520","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nUSA CEF: 10% Yield, Growth And Value, Vs. ASG 9% Yield Growth Fund | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Searching for viable high-yield income vehicles in 2023? 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