November 20, 2017
(Update: Partial fill at $22.48. Changed to $22.51)
We have bought and sold GBAB several times over the years. Most recently we sold it in early October when the technicals looked poor. It dipped a little, but is now on the upswing. In hind-sight we should have just kept the position, and not sold.
We are going to get back into GBAB and buy a new small position in Guggenheim Taxable Municipal GBAB today. This is suitable for your IRA account. Yield is 6.7%
We are placing a limit order at $22.48…….and will watch it today. For some reason the price is already up ten cents so we will just wait and watch.
FUND DESCRIPTION: Guggenheim Taxable Municipal Managed Duration Trust, formerly Guggenheim Build America Bonds Managed Duration Trust, is an exchange-traded closed-end fund or a closed-end ETF that is officially described as a diversified, closed-end management investment company.
INVESTMENT OBJECTIVE: The Guggenheim Taxable Municipal Managed Duration Trust seeks to provide current income with a secondary objective of long-term capital appreciation.
FUND/TRUST STRATEGY: The Trust seeks to achieve its investment objectives by investing primarily in a diversified portfolio of taxable municipal securities known as Build America Bonds (BABs), Under normal market conditions, the Trust will invest at least 80% of its Managed Assets in BABs, and may invest up to 20% of its Managed Assets in securities other than BABs, including taxable municipal securities that do not qualify for subsidy payments, tax-exempt municipal securities, asset-backed securities (ABS), senior loans and other income producing securities. Under normal market conditions, at least 80% of the Trust’s Managed Assets will be invested in securities that, at the time of investment, are investment grade quality. The Trust may invest up to 20% of its Managed Assets in securities that, at the time of investment, are below investment grade quality. Securities of below investment grade quality are regarded as having predominately speculative characteristics with respect to capacity to pay interest and repay principal, and are commonly referred to as junk bonds.
Here is a link to an article which gives you detail on this position.
Last week, I discussed the potential year-end setup for a January correction. To wit:
“It is the turn of the calendar where I see the potential for a bigger correction. Come January, I think there is a high-likelihood of ‘tax selling’ by fund-managers to lock in gains, particularly if ‘tax reform’ legislation has passed, as taxes won’t be due for 21-months (assuming late filing.)
That selling, combined with concerns over the Fed’s rate hike in December and reduction of the balance sheet, could facilitate a deeper correction of 3-5%.”