When it comes to high-yielding closed-end funds (CEFs), there’s one thing we always need to keep in mind:
Buying “new” CEFs can lock you into a big discount that never disappears.
That’s because, as we’ll see below, in the small world of CEFs, the market’s view of a new fund’s assets is often much less than what management thinks these assets are worth.
When that disconnect happens, big discounts are inevitable. But unlike, say, an established CEF that finds itself temporarily out of favor, the discounts on these new funds are far from being buying opportunities.
That’s because they can take a long time to close—if they ever do.… Read more
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