- Clearly, Cornerstone and the Cornerstone funds have tapped into a bonanza that has less to do with exceptional portfolio management and more to do with investor weakness for income.
- Cornerstone has figured out that investors cannot say no to funds that offer 21% yields, no matter how improbable their funds could actually cover those yields.
- I've even heard from shareholders who say, "You get your money back in five years and its pure profit after that!" If only it were that simple.
- But since investors keep bidding up the Cornerstone funds to ever higher premiums, currently about 38%, it's clear that yield is king even if a current buyer 'only' gets a 13% market yield right now.
- Which is why timing is everything in the Cornerstone funds and legacy shareholders who know to re-invest at NAV may be celebrating their gains, but I'm afraid current investors who don't know how to play the Cornerstone funds are going to be massively disappointed.
For further details see:
Equity CEFs (CLM And CRF): Heck, Just Put Cornerstone In Charge Of All CEFs