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Offbeat Offerings: Closed-End Funds

by Cara Scatizzi

Offbeat Offerings: Closed End Funds Splash image

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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Cara Scatizzi is a former associate financial analyst at AAII.


Discussion

John from Florida posted over 3 years ago:

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.


Ralph from Idaho posted over 2 years ago:

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.


Patrick from Ohio posted over 2 years ago:

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


Leroy Supowitz from Pennsylvania posted about 1 year ago:

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.


Pete K from New Jersey posted 10 months ago:

Leroy, everything you seek can be found on either cefconnect.com, cefa.com or cef.capitallink.com, which all have either screeners or search mechanisms. The exception might be the 3Yr average discount. CEFConnect offers 52-wk High, Low and Avg. discounts. You could probably compute the 3Yr Avg from the data available.

I built a spreadsheet to extract all this info and more, e.g, leverage used, expense ratio, distribution breakdown, market cap, etc. The sheet uses VBA code and a financial add-in (SMF - free on Yahoo groups) which automates the process for me.

I own 7 CEFs, with plans to add more. There are also authors on Seeking Alpha who are very knowledgeable re CEFs: Douglas Albo, George Spritzer, John Cole Scott, and Robert Lewis.


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