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Morningstar, Inc. Commentaries

A Checklist for Fixed-Income Fund Investors

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.

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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.