Closed-End Fund

RECENT NEWS
The Hindu Business Line  Oct 23  Comment 
Market watchers fear mis-selling by agents
SeekingAlpha  Oct 15  Comment 
By Steven Bavaria: If you think closed end funds have gone into the tank recently, and bargains await the intrepid investor, the story gets even better. Cohen & Steers Closed End Opportunity Fund (NYSE:FOF) is a "fund of funds" that holds other...
SeekingAlpha  Oct 8  Comment 
By Invesco US: By Jack Tierney "We're going broke with all the money you're saving," responds a skeptical spouse to a spending-challenged partner's boast about how much they saved with huge discounts on purchases that put them way...
SeekingAlpha  Sep 30  Comment 
By Tim Plaehn: At the present time, near the end of a month marked by volatility, the Alerian AMZ MLP index is down 2.5% for September, and the majority of the MLP focused closed-end funds have declined by up to three times that amount. Yet a...
SeekingAlpha  Sep 24  Comment 
By Convergence Investments: MLP investors and closed end fund investors are kindred spirits. Both investor classes are willing to wade into lesser-known waters in search of high and dependable yields. Thus it should not be a surprise that...
DailyFinance  Sep 8  Comment 
Nuveen Investments, a leading global provider of investment services to institutions as well as individual investors, today announced that Diversified Real Asset Income Fund (DRA) has declared distributions. These...
DailyFinance  Sep 2  Comment 
Nuveen Investments, a leading global provider of investment services to institutions as well as individual investors, today announced that 76Nuveen closed-end funds declared regular monthly distributions. These funds represent...
SeekingAlpha  Sep 2  Comment 
By Reuben Sushman: The Market Vectors CEF Municipal Income ETF, (NYSEARCA:XMPT) is a Closed End Fund of Funds. According to the sponser, Van Eck Global: The Market Vectors CEF Municipal Income ETF seeks to replicate as closely as...
DailyFinance  Aug 19  Comment 
FORT LAUDERDALE, FL -- (Marketwired) -- 08/19/14 -- The Templeton closed-end Fund referenced below, which trades on the New York Stock Exchange, today released a portfolio allocation update containing the following information as of July 31,...




 
TOP CONTRIBUTORS

Closed-End Fund

In the US, closed-end companies are one of four types of investment companies along with mutual funds, exchange traded funds and unit investment trusts. [1] It is a fund that issues a fixed number of shares, and issues new shares through Rights offerings. The value of the shares in a closed end fund is determined by the market value of their shares on the exchange.

The closed end fund, uses a professional manager to invest the fund's assets in a diversified selection of securities. It has a fixed number of shares. Shares are traded between market participants. Thus, shares of a CEF can trade at a premium or discount to the perceived net assets value of the portfolio. This price elasticity is based upon demand for the CEF's shares, rather than the value of its assets. [2]

Most closed-end companies are designed for capital appreciation. Many investors buy stocks because, historically, as a group they have shown the highest returns. [3] Many of the CEFs are designed for distribution yield. Almost all closed-end companies distribute interest, dividends, and capital appreciation, annually. Managed income CEF's may pay out part of the principal to meet there goals.

The history of closed-end funds began more than 30 years before the first mutual fund was formed in the United States. [4] Because management is not influenced by the demand for shares of its fund like open-ended funds. CEF’s have a real advantage in illiquid markets, or when making direct placements.

The Investors total return is a combination of the change in its actual market price over the periods measured, plus the effect of fund distributions, whether reinvested or paid in cash. [5]

CEF’s have been an important investment tool since 1896, their use today is quite a bit different than of the previous generation. Mainly people buy them to make more money.

Investors will want to read the prospectus for any offering. These are available online. Yield has to analyze. How is it composed? Is it "equalized over the year'? Is it partially a result of leverage? How much gearing is allowed and used within the CEF? What is the amount of UNII: undistributed net investment income? This is income earned but yet to be paid out. It can result from carry trade, roll ups, reverse repos or interest rate swaps; in other words, from leverage.

These investments are not as plain vanilla as they used to be. They deserve a place in the retirement income portfolio, perhaps 5 - 10% - as they do give off go yield, but be aware. Their risks can be hidden from the unwary. If you are uncomfortable with investigating securities, avoid these.

Good resources for these are: NYSE.com, NASDAQ.com, the CEFA website and quantumonline.com.

ETF's are not closed-end companies. A new entry to the CEF field is from Powershares. This ETF has the ticker PCEF. PCEF is open-ended, not a closed-end company. It has all the disadvantages of an open-end fund. It is based upon the S Network Composite Closed-End Fund Index. This index currently holds 76 of the 624 CEFs trading, focusing upon taxable income, high yield emerging debt and option-income funds. The expense is .50%, but the total expense is closer to 2% if one factors in the expenses of each underlying fund. The current distribution yield is 6.7% and the ETF trades at a small discount (2.6%).

The benefit to owning this ETF is the diversification, intraday liquidity and distribution yield, all of which closed-end companies also have. It is an easy way to own the market sectors and enhances the return potential - as well as the loss potential.

As of this writing (today) the Index has added sixteen new CEFs and deleted four from its membership. Current news on this Wikinvest page shows these changes.

References

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki