Nuveen Equity Premium Opportunity Fund (NYSE:JSN)

BoomerBull (63.54) Submitted: 12/23/2010 4:04:21 PM : Start Price: $11.44 JSN Score: +2.04

First JSN is not an ETF as another CAPS user indicated. It's a closed-end fund (CEF). In some respects it is like and ETF in that it can be bought or sold anytime throughout the day. Unlike an ETF, or at least most ETFs, it is an actively managed fund. Also unlike and ETF, it has a fixed number of shares. Now, CEFs can sell at a premium or a discount to net asset value. As of this writing JSN sells at a 52-week average discount of 1.34% and a current discount of a 5.6%, which is better. JSN does not use leverage like most CEFs, so it is more conservative and less volatile. It's portfolio is chock full of large-cap industry leaders. It makes quarterly distributions to shareholders, currently returning 9.9%. That's a hefty return. It does that by selling calls on equity holdings that increase total return. All this is good, but it tempers performance in rapidly rising markets. But that works in your favor in declining markets. A "buy equity/write option" strategy is a conservative approach to wealth gains.

So why would I rate it underperform if I think it will actually rise in share price and the discount will shrink? I expect it to rise slowly but to also slightly underperform the S&P over time. But I also expect it to drop less when the S&P finally turns negative. I own JSN and like it for reducing the volatility and risk of my overall portfolio.