The Western Asset Mortgage Opportunity Fund (DMO) has been delivering for us tactically over the past few months. The fund’s discount has been range-trading between around 10% and low single-digits and one we have discussed repeatedly on our service. This has been a fun one to trade for the more tactically-oriented investors.
The reason we have used DMO solely for tactical positioning is because it does not acquit itself very well in its NAV returns. In particular, it handled the March drawdown very poorly compared to other non-agency RMBS funds.
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