Morningstar, Inc. Commentaries
Dec 27, 2013
Click here to access A Checklist for Fixed-Income Fund Investors
After a volatile year for fixed income, many closed-end fund investors are understandably skittish as they make year-end portfolio adjustments. Some will adjust their portfolios toward comparatively less-volatile ETFs and open-end funds, but others will find the current environment ripe with opportunities for investing in discounted funds. But with roughly 400 fixed-income CEFs in existence, sifting through the universe can be daunting. Even after drilling down into a specific sector, it can be hard to tell the difference between two funds. Especially within a single fund family, it is not uncommon to come across several funds with nearly identical investment mandates and strategies. (Are the differences between Nuveen Premium Income Muni 2 (NPM) and Nuveen Premium Income Muni 4 (NPT) truly significant?) With this in mind, a systematic approach to picking CEFs might be helpful for investors worried about covering all their bases. While the following checklist is by no means fully inclusive of all CEF-related concerns, it is a good starting point.