Offbeat Offerings: Closed-End Funds
by Cara Scatizzi
Most investors are quite familiar with open-end mutual funds, portfolios of securities that offer diversification and professional management at a low cost even for smaller-sized investors.
Closed-end funds, however, are a sometimes-overlooked alternative. Closed-end funds differ from mutual funds in that once the fund issues shares, those shares are bought and sold in the open market; unlike a mutual fund, the closed-end fund does not itself stand ready to redeem shares from investors wishing to sell their shares. Closed-end fund shares have both a net asset value and a share price, and sometimes trade at discounts or premiums to net asset value.
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A closed-end fund raises capital by issuing a fixed number of shares, which typically (but not always) are listed on a stock exchange. Once issued, those shares are bought and sold in the open market.
In contrast, open-end mutual funds generally sell their shares on a continuous basis (although some will close to new investors), and shares are purchased and redeemed directly by the fund (or through a broker for the fund) at the fund’s approximate per share net asset value plus any shareholder fees or sales charges imposed by the fund.
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Discussion
CEF's... I own many primarily from BlackRock and Pimco.
Their dividends are like clockwork monthly or quarterly and those that maintain or advance in Capital value I keep. If one fails on the Capital side they are sold and replaced with another.
As all are in IRA/SEPs etc they are serving me well.
Funds managed using "Covered Calls" and "Bond Funds" I gladly pay the Management Fee.
Monthly dividends I do not require as income are used to build the share base.
I am certainly open to constructive critique or other in my approach...
tks in advance.
posted about 1 year ago by John from Florida
Being fairly new to the realm of Closed-End Funds, I would like to know if you would share your criteria for analysis and limits on evaluating and selecting a CEF for investment.
Thank you.
posted about 1 year ago by Ralph from Idaho
CEFs are categorized by the types of investments they make. Barron's prints a weekly report on the performance of the most popular CEF and lists their NAV and the current premium or discount along with the return....seems like the best approach is to find funds selling at discount to NAV with acceptable return...their is a possibility of appreciation along with the monthly return as referenced above
posted about 1 year ago by Patrick from Ohio
I am looking for a CEF screening program to screen for:
current discount,3 yr average discount, leverage %, 12 month NAV performance and 12 month price performance, distribution (yield) %, etc.
It could be online or via disk updates and not extravagently priced. I am a novice at computing as well as screening so a decent tutorial would be great.
appreciate any ideas.
posted 8 months ago by Leroy Supowitz from Pennsylvania
