{"id":6737,"date":"2016-11-04T11:05:16","date_gmt":"2016-11-04T15:05:16","guid":{"rendered":"http:\/\/www.thet3trader.com\/?p=6737"},"modified":"2016-11-04T11:05:16","modified_gmt":"2016-11-04T15:05:16","slug":"trader-mailbag-whats-deal-phk","status":"publish","type":"post","link":"https:\/\/blog.t3live.com\/2016\/11\/04\/trader-mailbag-whats-deal-phk\/","title":{"rendered":"Trader Mailbag: What&#8217;s the Deal with PHK?"},"content":{"rendered":"<p><em>Hi Mike,<\/p>\n<p>You have been in\u00a0<strong>PHK <\/strong>for a long time.<\/p>\n<p>What is the reason for the heavy selling?<\/p>\n<p>-Tom<\/em><\/p>\n<p>Hi Tom,<\/p>\n<p>Thank you for the question.<\/p>\n<p>Indeed, I have been in the <strong>PIMCO High-Income Fund<\/strong> (PHK) for a long time and it has been clobbered, dropping from a peak of $10.15 in August to $8.55 today.<\/p>\n<p>PHK is a closed-end high-yield bond fund that uses leverage to juice its returns.<\/p>\n<p>Closed-end funds are significantly more volatile than plain-vanilla ETF's and mutual funds.<\/p>\n<p>And PHK has been trading at a giant premium to net asset value (NAV).<\/p>\n<p>So with the high-yield market coming under pressure on the decline in oil prices and pre-election jitters, <strong>PHK <\/strong>has gotten slammed, with that premium to NAV closing hard.<\/p>\n<p>As I've discussed before, I only like buying volatile closed-end funds like PHK on extreme down days.<\/p>\n<p>Why?<\/p>\n<p>Because they get absolutely destroyed, creating attractive buying opportunities.<\/p>\n<p>As far as my long-term strategy with PHK goes, it's a buy and hold position for me, and I just leave it alone with dividends reinvesting. That helps cushion me against the short-term volatility, which can be pretty extreme.<\/p>\n<p>I'd only consider another outright buy on a dip below $8.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Hi Mike, You have been in\u00a0PHK for a long time. What is the reason for the heavy selling? -Tom Hi Tom, Thank you for the question. Indeed, I have been in the PIMCO High-Income Fund (PHK) for a long time and it has been clobbered, dropping from a peak of $10.15 in August to $8.55 today. PHK is a closed-end high-yield bond fund that uses leverage to juice its returns. Closed-end funds are significantly more volatile than plain-vanilla ETF&#8217;s and mutual funds. And PHK has been trading at a giant premium to net asset value (NAV). So with the high-yield market coming under pressure on the decline in oil prices and pre-election jitters, PHK has gotten slammed, with that premium to NAV closing hard. As I&#8217;ve discussed before, I only like buying volatile closed-end funds like PHK on extreme down days. Why? Because they get absolutely destroyed, creating attractive buying opportunities. As far as my long-term strategy with PHK goes, it&#8217;s a buy and hold position for me, and I just leave it alone with dividends reinvesting. That helps cushion me against the short-term volatility, which can be pretty extreme. I&#8217;d only consider another outright buy on a dip below $8.<\/p>\n","protected":false},"author":6,"featured_media":4097,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,1],"tags":[391,165,392,393,394],"class_list":["post-6737","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","category-uncategorized","tag-cefs","tag-closed-end-funds","tag-mailbag","tag-phk","tag-trader-mailbag"],"_links":{"self":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/6737","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/comments?post=6737"}],"version-history":[{"count":0,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/6737\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/media\/4097"}],"wp:attachment":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/media?parent=6737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/categories?post=6737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/tags?post=6737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}