This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Sorting Out the Closed-End Craziness

The recent action in closed-end funds has been so puzzling that it requires a professional code-breaker to decipher it. Luckily, that was Richard Shaker's job before he started managing money.

After retiring as chief of mathematical research for the National Security Agency in 1995, Shaker started Shaker Financial Services in order to focus his quant skills on trading closed-end funds. Based in Annapolis, Md., Shaker manages more than $60 million in assets, up from $3 million in 1995 and $24 million in 2002.

At the end of March, Shaker's fund had a one-year total return of 23.4%, compared with 11.82% for the S&P 500 Total Return Index. For the prior three- and five-year periods, Shaker handily beat that index by 7.5 and 10.6 percentage points, respectively. spoke with Shaker about the recent turbulence in closed-end funds. Lately we have seen a lot of sharp moves in the closed-end world. What is your take on the increased volatility?

Shaker: Our strategy is to look for an individual fund that randomly moves above or below its typical discount level. Recently, we have seen entire sectors make a large, quick move in discounts, then just as quickly return to their pre-move levels. This is unusual. I've never seen it occur so dramatically.

For example, we follow 10 funds that write options on their large-cap holdings as their basic strategy. I don't like the strategy and don't like the fact that they trade at very small discounts or premiums.
1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ZF $11.31 0.00%
CSQ $8.37 0.00%
GF $12.60 0.00%
ISL $16.30 0.00%
MXE $9.92 0.00%


Chart of I:DJI
DOW 16,027.05 -177.92 -1.10%
S&P 500 1,853.44 -26.61 -1.42%
NASDAQ 4,283.7530 -79.3910 -1.82%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs