{"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’s the Deal with PHK?"},"content":{"rendered":"

Hi Mike,<\/p>\n

You have been in\u00a0PHK <\/strong>for a long time.<\/p>\n

What is the reason for the heavy selling?<\/p>\n

-Tom<\/em><\/p>\n

Hi Tom,<\/p>\n

Thank you for the question.<\/p>\n

Indeed, I have been in the 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

PHK is a closed-end high-yield bond fund that uses leverage to juice its returns.<\/p>\n

Closed-end funds are significantly more volatile than plain-vanilla ETF's and mutual funds.<\/p>\n

And PHK has been trading at a giant premium to net asset value (NAV).<\/p>\n

So with the high-yield market coming under pressure on the decline in oil prices and pre-election jitters, PHK <\/strong>has gotten slammed, with that premium to NAV closing hard.<\/p>\n

As I've discussed before, I only like buying volatile closed-end funds like PHK on extreme down days.<\/p>\n

Why?<\/p>\n

Because they get absolutely destroyed, creating attractive buying opportunities.<\/p>\n

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

I'd only consider another outright buy on a dip below $8.<\/p>\n","protected":false},"excerpt":{"rendered":"

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’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’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’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’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"],"yoast_head":"\nTrader Mailbag: What's the Deal with PHK? - T3 Live<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blog.t3live.com\/2016\/11\/04\/trader-mailbag-whats-deal-phk\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trader Mailbag: What's the Deal with PHK? - T3 Live\" \/>\n<meta property=\"og:description\" content=\"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'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'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's a buy and hold position for me, and I just leave it alone with dividends reinvesting. 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