For income investors, closed-end funds remain an attractive investment class that covers a variety of asset classes and promise high distributions and reasonable total returns.
Closed-end funds are generally characterized by higher volatility and deeper drawdowns than the broad market. For these reasons, they are not suited for everyone.
In this monthly series, we highlight five CEFs that have solid track records, pay high distributions, and are offering “excess” discounts. We try to separate the wheat from the chaff using our filtering process to select just five CEFs every month from around 500 closed-end funds.
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Olivier Le Moal/iStock via Getty Images In this monthly article, we try to identify five closed-end funds ((CEFs)) that have a solid past history, pay high-enough distribution and offer reasonable valuations. If you liked CEFs at the end of 2021, you are sure to like them now. The market took a hit during January 2022, and CEFs are no exception. Sure, some funds like tech-heavy or growth funds took a bigger hit, but most are trading at lower prices and better discounts than just 45 days ago. However, in spite of the recent volatility and some modest declines, the prices of many funds are still a bit elevated, and it is best to buy in multiple lots.
Obviously, the CEFs do not exist in a vacuum. For the most part, they move along with the broader market. This is especially true for equity funds. However, there are many funds with underlying asset classes that are known to provide divergence from the market. So, it is of utmost importance that we make our CEF portfolio a diversified one in […]
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