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Morningstar, Inc. Commentaries

10 Inexpensive CEFs to Put on Your Radar

Dec 31, 2013
Click here to access 10 Inexpensive CEFs to Put on Your Radar

With many closed-end funds ending the year trading at substantial discounts, it's natural for value-conscious investors to scour the CEF market for bargains. If discounts contract, they can provide a margin of safety to investors: If the net asset value stays constant, investors benefit as the share price converges toward its underlying NAV. Similarly, contracting discounts can ease the pain of a declining NAV. All that said, there's no guarantee that purchasing discounted CEFs will lead to positive returns. After all, discounts can widen and management teams can underperform. Investors should dig deeper by looking at valuation on a relative basis and by focusing on high-quality funds run by experienced managers with sound processes and low fees. Combining Morningstar Analyst Ratings with z-statistics can be a powerful way to uncover great funds at attractive valuations.

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Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individuals, financial advisors, and institutions.

Morningstar provides data on more than 385,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 8 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services and has approximately $195 billion in assets under advisement or management as of Sept. 30, 2012. We have operations in 27 countries.