RED FLAG: "This innovative fund was established [in 2007?] to take advantage of the 15% maximum U.S. federal income tax rate for qualified equity dividends. Unlike conventional equity-income funds, the Fund utilizes three distinct portfolio strategies. Guided by the sixty-one day holding period that the new dividend regulations specify, we seek to turn over one part of the portfolio in order to increase the dividend flow beyond four quarterly payments."
Wall Street's recent track record with "Innovative" products has been dismal. Things like derivatives were "innovative." I've usually run from the latest overly complex Wall Street products.
AOD has a small amount of leverage (about 5%), a ton of portfolio turnover and has a tax kicker. Hope you can explain how it works come time to have your taxes prepared. My guess is you don't want to mess with this complex fund unless 1) you buy six-figures worth; and 2) you are in a high tax bracket.
While there may be a tax advantage (for some) with the dividends, the high portfolio turnover will throw off a lot of cap gains tax liability in bull markets. Some high-income investors would do better with an ultra low turnover Index fund.
There is also risk of complex "products" triggering IRS audits.
Any CPAs here?
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