Helicopter Fed: Attractive mREITs, Bond CEFs, Huge Yields, Discounted Prices

This article shares four compelling investment ideas offering huge yields and trading at attractively discounted prices.
The ideas include mREITs and Bond CEFs that trade at significant discounts to their book values and are being supported, to varying degrees, by the actions of the US Fed.
The Fed is pumping an unlimited amount of liquidity into the system by buying the types of bonds these compelling mREITs and CEFs own.
The COVID-19 pandemic has been devastating to lives and markets. An approximate resolution date is unknown, and the full extent of market damage is yet to be determined. The market "fear index" (VIX) remains dramatically elevated-an indication that investors expect continued high volatility. We write this article from the perspective that this too (the coronavirus pandemic) shall pass (eventually), and that it is much easier (and systemically important) for monetary policies to support some of the underlying assets (e.g. Agency MBS) of the mREITs and Bonds CEFs we review in this article than supporting non-publicly-traded business loans (such as those held by high yield BDCs (BDCS) for example). Every investor gets to make their own investment decisions (in accordance with their own needs and objectives), we hope to share some helpful information and ideas, and we agree with famous value investor, Seth Klarman, when he explains:
"Paying Less is Less Risky: Risk comes from the price you paid… It isn't uncertainty or volatility. When there is great uncertainty and it drives prices down, you buy with less risk."
Helicopter Fed

(image: FX Trader Magazine)

Helicopter money (first coined by Milton Friedman in 1969) is "a proposed unconventional monetary policy, sometimes suggested as an alternative to quantitative easing (QE) when the economy is in a liquidity trap (when interest rates near zero and the economy remains in recession)." And along these lines, to backstop the financial system, the US Fed has recently been buying... Read more