This column was originally published on RealMoney on Sept. 26 at 8:14 a.m. EST. It's being republished as a bonus for TheStreet.com readers.The right type of diversified portfolio can be thought of as a comfortable mix of hot potatoes and steady Eddies. I'm expecting 2006 will be a rough year for domestic equities, so I think it will make sense to have a heavier weighting than normal in steady Eddies. This is a role that call-writing closed-end funds, or CEFs, can play. One of the most popular categories of new products this year, call-writing CEFs buy stock and sell either covered calls or index options (calls and puts) to generate income. I am aware of about 20 of these, but I'm sure there are more. I learned about them last fall in an
|Compared to Stocks and Bonds |
The Madison Claymore Covered Call Fund (MCN) has had some correlation to the S&P 500 but has been less interest rate-sensitive than 10-year bonds (TNX)
|Correlation to Tech and Financials |
Despite being heavily invested in the tech and financial sectors, Madison Claymore's performance has not tracked them
(The tech sector is represented by the SPDR XLK; financials by the SPDR XLF)
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