ADX Vs. USA: Why I Am Buying The Winner And Selling The Loser
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Dmytro Lebid766 FollowersFollow5ShareSavePlay(11min)Comment(1)SummaryADX earns a 'Buy' rating, outperforming USA, which is rated 'Sell' due to persistent underperformance.In this article, you will find out why the two legendary closed-end funds, ADX and USA, are fundamentally different despite initially seeming like 'twins.'I will examine the reasons why investing in ADX remains profitable today, while USA will likely 'eat up' your capital.I am continuing my 'Hunt For Income' series today, providing a comparative analysis of direct competitors. Alistair Berg/DigitalVision via Getty Images Investment thesis The quest for assets that generate high returns in the form of dividend payments continues. And today, I will take a look at two of the most legendary closed-end funds with a long history: AdamsThis article was written byDmytro Lebid766 FollowersFollowMy professional journey in the investment field began in 2011. Today, I combine the roles of an Investment Consultant and an Active Intraday Trader. This synergistic approach allows me to maximize returns by leveraging deep knowledge in economics, fundamental investment analysis, and technical trading.
What You Will Find in My Analysis: Clear, actionable investment ideas designed to build a balanced portfolio of U.S. securities. A combination of macro-economic analysis and direct, real-world trading experience. My two university degrees in Finance and Economics were merely the starting point—my true expertise was forged through active practice in management and trading. My Goal on Seeking Alpha: To identify the most profitable and undervalued investment opportunities (primarily in the U.S. market) that are capable of forming a high-yield, balanced portfolio. Follow me for a balanced view, backed by active trading practice.Analyst’s Disclosure:I/we have a beneficial long position in the shares of ADX either through stock ownership, options, or other derivatives. 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. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsWhat drives the superior total return of ADX versus USA?ADX's concentrated S&P 500, tech-heavy portfolio and low fees (0.59%) have consistently outperformed USA's multi-manager, value-growth approach, resulting in a 20.82% 1-year total return versus USA's -6.85%.How do the funds' discounts to NAV affect their attractiveness?ADX typically trades at a 5-10% discount, enhancing value for buyers, while USA's discount has recently widened to nearly 10%, reflecting eroding investor confidence and underperformance.What are the main risks to the ADX investment thesis going forward?ADX's high correlation with the S&P 500 and reliance on tech/growth stocks mean a downturn in the Mag-7 or broader market could pressure returns and challenge its stable payout.Recommended For You