SCHQ - A History Of Rising Rates And CEFs

• Most discount widening in a rising rate cycle occurs before the actual first rate hike by the Federal Reserve.
• The Fed pivot scared a lot of income investors but it appears that the market is overly hawkish at this point, which could provide nice upside post-March.
• Discounts of CEFs tend to close a bit after the Fed begins raising rates but NAVs see significant upside after they move.
• Inflation is peaking which could also provide another catalyst to higher NAVs and tighter discounts as investors get more comfortable that it is indeed transitory.
• I am slightly underweight CEFs at the moment and am waiting a bit longer (to see if we retest the lows of Jan 24th which I think is highly possible) to get in heavier.

For further details see: