CEFL Will Be Down In February, But Still Yield 26.8%

Published Mon, 01 Feb 2016 10:40:56 -0500 on Seeking Alpha

Even though 28 of the 30 high dividend closed-end funds that comprise the index upon which the UBS ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN (NYSEARCA: CEFL) and the YieldShares High Income ETF (NYSEARCA: YYY) is based pay monthly dividends, there is a seasonal factor involved with the February 2016 CEFL dividend. Of the 30 components in the index, nine will not have ex-dividend dates in January 2016. Thus, they will not contribute to the February 2016 CEFL dividend.
Only the Morgan Stanley Emerging Markets Domestic Debt Fund (NYSE: EDD) and the Royce Value Trust (NYSE: RVT), a newly added component, now pay quarterly dividends in January, April, October, and July. Thus, EDD and RVT will not be included in the February 2016. Additionally, there are seven other components that pay monthly, but will not have ex-dividend dates in January 2016. As shown in the table below, which also indicates which components were newly added in the rebalancing in January 2016, these closed-end funds mostly had two ex-dates in December 2015 and none in January 2016. This is a common practice for closed-end funds who have a "clean-up" additional dividend in December to facilitate compliance with the regulations which require regulated investment companies distribute most of their income to shareholders each year.
With only 21 of the 30 closed-end funds having ex-dividends in January 2016 and the net asset or indicative value of CEFL being down 15.7% from year-end 2015, the CEFL... Read more