IGD：另一个回报超过其收入的基金

IGD is another in a long line of funds that pay out more in income than it earns.As a more conservative equity fund, it also generates poor risk- (or volatility-) adjusted returns.Investors would be better off with a simple balanced stock and bond portfolio.The Voya Global Equity Dividend and Premium Opportunity Fund (IGD) looks to be another in a long line of funds marketed to investors based on income but generating sub-par total returns and poor risk-adjusted returns. Investors, even those seeking income, are best served looking elsewhere.IGD is a closed-end fund that,according to the Voya website, “... seeks a high level of income; capital appreciation is secondary.” It’s fine to focus on income so long as the fund is actually generating income and not just returning existing capital to shareholders. We’ve seen this time and time again with a variety of funds - they target 10% payout ratios (based on NAV), but generate well below 10% annually in total returns. IGD looks like another example of this type of fund.According to Morningstar, the fund is paying out 10.5% based on NAV. However, it looks like a large portion of this is return of capital or short- or long-term capital gains.

(Source: Fund website, red highlight author)Indeed, only slightly above half of the most recent total distributions listed came from dividends.The main problem is that IGD hasn’t generated anywhere near the approximately 10% returns needed to pay out 10%. The result is that NAV, which started at $20 per share at the fund’s inception, is now down to $6.97. Sure, investors got some income along the way, but not enough. Total returns have been far less than 10% per year, as shown below.

(Source: Fund website)You might not think this is that big of a deal. Sure, it’s paying out more in income, but so what? Total returns are positive, investors made money, and the fund is being marketed to equity income investors, so you wouldn’t expect total returns to match the market. Well, those are all valid arguments on the surface. But digging deeper some flaws emerge in that line of thinking.IGD hasn’t done very well on a risk-adjusted basis either. First off, if the fund is being bought as a conservative equity investment, the upside/downside capture ratio isn’t very compelling.

(Source: Morningstar)Over the past ten years, Morningstar has put the beta of the fund at .68 and the alpha at -3.75%. The fund cushions investors on the downside, but not enough to make up for the upside they miss out on.Second, there are other equity income funds that have performed much better, such as the Vanguard Dividend Appreciation ETF (VIG).(Source: Fund websites, Morningstar)However, VIG was more volatile than IGD. Also, it's perhaps unfair to compare a global fund in IGD to a domestic fund in VIG. For investors that consider volatility an important part of an investment, a simple 50% world stock fund (in the form of VT) and 50% bond (in the form of BND) portfolio gets you better performance than IGD.Over the past 10 calendar years, IGD has had an average annual return of 5.33%. Our simple 50/50 portfolio returned 6.73% on average annually. Volatility as measured by standard deviation was also better. IGD had a standard deviation in returns of 9.4%, while our 50/50 portfolio had one of just 7.5%.IGD is just another fund that prioritizes income over total risk-adjusted returns. Investors who are looking for income need to be aware that the distributions from the fund are not being covered by fund investment returns in every year. Even taking into account its positioning as a conservative equity fund, it still doesn’t outperform a simple 50/50 balanced portfolio. There’s no real reason we can see that long-term investors of any type would want to hold this fund short of betting that the market price will eventually converge with the fund’s NAV.I am/we are long BND, VT.I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.