Marketplace Roundtable #46: Closed-End Fund Allocations For The Next Recession, With Alpha Gen Capital

Alpha Gen Capital joins the Marketplace Roundtable podcast to discuss his approach to investing in closed-end funds, as plays out on his Marketplace service, Yield Hunting . Alpha Gen Capital prefers closed-end funds due to the income flows and strong risk-adjusted returns. It typically looks at "high quality, closed-end bond funds," including taxable and tax-free products but is constantly looking for how to position its portfolio. "The positioning in terms of the sub-sectors of the bond market is much more important than the actual selection of the security," says Alpha Gen Capital, which wants to be in a section of the market that offers the best risk-adjusted return going forward. It adjusts the portfolio's target weights on a monthly basis to take advantage of where it sees the most upside. At the start of the year, the firm was heavily positioned in municipal bonds and high-yield products due to what it saw as "a rare, non-recessionary bear market." There was an opportunity to capture the decline in high-yield spreads and the tightening in closed-end fund discounts. Munis were "beaten down pretty significantly in the second half of last year." More recently, Alpha Gen Capital has been reducing high-yield exposure and moving it into mortgages. "During the next recession, we want to be centered primarily in the mortgage and muni spaces." It views this space safer even than investment grade because of over-leveraged corporate bonds. Topics covered: 2:15 minute mark - Tell us about your investing strategy. Why the emphasis on closedeend funds? 4:30 - What's your current positioning? 6:30 - Wouldn't mortgage products be sensitive to inflation? 8:00 - How do you select closed end funds? 12:30 - Key lessons learned. 14:00 - Prediction in bond markets for coming months 18:40 - What scares you about the markets right now? 22:30 - Picks 27:30 - Anything to avoid in the Muni space?

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Marketplace Roundtable #46: Closed-End Fund Allocations For The Next Recession, With Alpha Gen Capital is an episode from SA Marketplace Roundtable.

This episode is 32:25 long.

This episode was published on Aug 12, 2019.

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