Equity CEFs: 40%+ Swap Idea

I doubt too many investors have noticed that the Delaware Investors Dividend & Income fund (DDF) has taken steps to prepare for a Rights Offering.And with DDF at a unbelievable 37% market-price premium, there\'s a long ways to fall when word gets out that up to an $82.6 million offering is in-the-works.Just a suggestion.  Sell your DDF immediately and swap it into the Nuveen Core Equity Alpha fund (JCE).I really don't have a bone to pick with theDelaware Investors Dividend & Income fund (DDF),, but there isthis fund should be trading atmarket price premium when there aremany other funds outperforming DDF at NAV not just recently, but for years and are trading at discountssimilar high yields currently.And DDF shouldnot be trading at a 37% market price premium when the fund is preparing for awhich could eventually almost double the size of the fund. Right now, it looks like the fund is just calculating what the registration fee might be, perhaps just testing the waters:Registration Fee Calculation Filing For DDFI frankly don't know how this fund is still north of $15 when there is a very real -25% downside potential from here. CEFs are not like stocks in which a price can be a subjective measure. In Closed-End funds, the value, as represented by the NAV, is non-negotiable and unless the fund has $4/share of NAV hidden somewhere or is underpricing the portfolio by $4/share, DDF should be trading closer to NAV, which is $11.01 as of yesterday's close and will be down again today.Do yourselves a favor and buy theNuveen Core Equity Alpha fund (JCE),, instead. Some quick calculations will show you that JCE has a 33% higher NAV than DDF but trades at about a -9% lower market price.That's insane, especially considering JCE's NAV is up 19.3% YTD compared to DDF's NAV which is up 16.3% YTD. And over a longer period of time, say over 3-years, JCE's NAV is solidly beating DDF's.

Data by YChartsJCE is an option income CEF that has an all US stock portfolio and sells index options against theRussell 2000 Small Cap index (IWM),This is a rather unusual strategy since JCE's stock portfolio is mostly large-cap value stocks, similar to DDF's stock portfolio.But, JCEbuy longS&P 500 (SPY)index futures which is why the fund's investment objective is to seek long-term returns in excess of the S&P 500. So from a return standpoint, JCE could be considered as aggressive a CEF as DDF, which is heavily leveraged and owns stocks and high yield bonds.Here is JCE's portfolio as of 3/31/2019:So conservatively speaking, I believe this swap is worth 30% and could be upwards of 40% if I am right. This assumes DDF could fall -25% and JCE could move up 15%. Both funds have the same 7.2% current yield though JCE's NAV yield is much more conservative. The final plus is that JCE's expense ratio is half of DDF's.I am/we are long JCE.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.