A unique closed-end equity fund, the Virtus Equity & Convertible Income Fund (NIE) has a balanced, risk-adjusted approach that is perfectly suited for all market conditions, asserts Todd Shaver, editor of Bull Market Report.
The fund provides investors with a wide range of opportunities, while making use of high-quality growth stocks, covered calls, and convertible debt to provide investors with a mix of capital appreciation and current income.
In line with broader markets, the fund has dropped by nearly 30% YTD, and 35% since its peak in November. Following substantial outflow in recent months, the fund currently trades at a discount to book value by about 11%.
For investors looking for better returns than convertible debt, while avoiding the volatility of equities, this remains an ideal fund, providing the best of all worlds.
The fund maintains 80% of its assets in blue chips and high-quality growth stocks, including the likes of Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), Tesla (TSLA), Amazon (AMZN), and more, with 20% held in convertible bonds, generating current income for investors.
Beyond this, the fund writes call options on its equity holdings on up to 70% of the securities held in its basket, to further spruce up returns for investors, This strategy has worked exceptionally well for the fund, ensuring consistent dividend payouts quarter after quarter, irrespective of market conditions.
Its allocation strategies have essentially created a fortress in the face of substantial macro headwinds, while outperforming broader indices most of the time, making it ideal for conservative investors, who want the superior returns of equity investments.
An actively managed fund led by an experienced management team, the expense ratio stands at just 1.12%. Given the exposure to high-quality stocks, along with convertible debt and call writing, investors are well protected against volatility, especially when investing for the long run. Conservative investors can simply sit back and enjoy the 9% yield and long-term capital appreciation.
