ETF Updates Archive
Pimco recently announced that it will postpone monthly dividend payments for 6 municipal closed-end funds.
Back in October, we cautioned investors against jumping into closed-end funds due to the fact that most of them are leveraged. The combination of a declining market and hard to replace leverage are causing Pimco and other closed-end fund managers to delay dividend payments.
In the past, fund managers borrowed money as a way to pump up fund returns. Many managers issued auction rate preferred securities as a way to raise debt. That market has dried up and left managers scrambling for other ways to borrow.
At the same time, the declining value of assets has created an asset coverage problem for closed-eContinue Reading »
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