For Income Investors:
Liberty All*Star Fund |  - Co. Spotlights available via RSS feed
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Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk. | | USA | $5.21 | Why It's Featured: Over 20% return in the last 9 months.
Keep an Eye On: The stock market, especially the large caps. | Dividend Yield | 5.3% | | Dividend/Earnings | n/a | | Financial Strength | n/a | | Div. Date: 6/12 | Ex-Div: 5/25 |
July 6, 2011 - Liberty All Star Equity Fund (USA-NYSE) is a closed-ended equity mutual fund managed by ALPS Advisers, Inc. The fund is co-managed by Matrix Asset Advisors, Inc., Pzena Investment Management, LLC, Schneider Capital Management Corporation, Chase Investment Counsel Corporation, and TCW Investment Management Company. It invests in the public equity markets of the United States. The fund invests in stocks operating across diversified sectors. It primarily invests in the combination of both value and growth stocks of large cap companies. Liberty All Star Equity Fund was formed in October 1986 and is domiciled in the United States.
USA was featured about 9 months ago. The price was $4.50 at the time. Now it's about 15.5% higher, and during that time, investors received a yield of 5.5%. That's a total return of 20.5% in less than a year. For income investors, that's a great return. For any investor, that's a great return. But this fund is not about income or capital gains. It's about getting both. Still, the yield is strong enough that it stands on its own merits. The capital gains are a bonus. The major premise with USA is that it hires several different managers, allocating assets equally among them. Performance counts. Constant monitoring keeps the best performers and replaces weaker ones. The primary goal is high returns through equities. High returns means a combination of yield and capital gains. For the month of June, the fund followed the market lower as its major holdings such as Apple, JPMorgan Chase, Dell, Qualcomm, Bank of America and other large stocks took a beating for most of the month. Top Ten holdings at the end of June were: Apple, JPMorgan Chase, Dell, Qualcomm, Bank of America, ACE, Ltd., PNC Financial Services Group, Visa, Allstate, Consolidated Energy. The fund is close to $1 billion in total assets. Information and Technology is 24.4% of the portfolio, 19.6% is in Financials, 14% in Energy, 11% in Consumer Discretionary, and 10.1% in Health Care.
As with all closed end funds, USA's price fluctuates around the fund's Net Asset Value (NAV). The NAV is the total value of all holdings divided by the number of shares outstanding. Right now, investors can buy USA at a discount to its NAV, a discount of 11%. That's like buying a $1 for 89 cents. The discount has been as steep as 26.67% in the last 3 years and as high as a 9.81% discount. From 2001 to 2006, the fund traded above its NAV in a range of 3% to 6%. The dividend payout is currently at 7 cents a quarter or 28 cents for the year. That gives a yield of 5.3%. But the fund will most likely have a capital gains distribution, as it does most years. Total return for the fund can be volatile (just like the market). In 2008, total return to investors was negative 39.8%. In 2009, it was a positive 31.6%. In 2010, it was 15.6%. If you want decent income and a chance to benefit from an improving stock market, look further into USA. It has strong diversity that covers most of the largest companies in the U.S. And with an advisor that is constantly looking to improve performance by switching managers, USA could give very good returns to income investors. |
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