2024-03-12 05:20:25 ET
Summary
- Nuveen Dow 30 Dynamic Overwrite Fund is a buy-write CEF that aims to replicate the Dow Jones index.
- The fund's complex risk factor, the SPY/DIA basis, has hindered its performance and is not properly disclosed.
- Retail investors would be better off buying DIA outright and writing their own call options rather than investing in DIAX.
- During periods of outperformance in the S&P 500 versus the Dow Jones, DIAX will severely underperform.
Thesis
Nuveen Dow 30 Dynamic Overwrite Fund ( DIAX ) is one of those rare buy-write equity CEFs that is hamstrung by design in our opinion. We wrote an initial piece about this name almost a year ago, and the CEF has not managed to outperform very low expectations. Given the substantial run-up in artificial intelligence names in the past year, and the Dow Jones versus S&P 500 divergence, we would have hoped the portfolio manager would have made some changes in the CEF's construction....
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For further details see:
DIAX: The Basis Is Still There, Keep Avoiding This Buy-Write CEF