Topic: How To Invest

Q: Pat: Could you please give me your opinion on two American closed-end funds: Liberty All-Star Equity Fund and AllianzGI Equity & Convertible Income Fund? The yields are great on each fund and you are getting their holdings at a discount. Thank you in advance.

Article Excerpt

A: Liberty All-Star Equity Fund, $5.22, symbol USA on New York (Units outstanding: 186.8 million; Market cap: $975.1 million; www.all-starfunds.com), is a closed-end fund that aims to combine the stock recommendations of three value-style and two growth-style investment managers. The fund started up on October 31, 1986, and its MER is 1.03%. The fund’s top holdings are Alphabet, Inc., Mondelez International, Visa Inc., Salesforce.com, Facebook, Inc., The Priceline Group, Amazon.com, Halliburton Co., Adobe Systems and Bank of America Corp. Liberty All-Star Equity Fund takes on an above-average level of risk with its holdings: its highest industry group weighting is Information Technology at 21.4%. The fund also has a high 9.2% yield. The company’s portfolio does not earn nearly enough dividend income to pay that high yield—especially with its emphasis on lower-yielding tech stocks. To make up the difference, the company has to make capital gains from the securities in its portfolio. When it fails to do that, Liberty meets its dividend payments by returning…

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