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Morningstar, Inc. Commentaries

Avoid These Incredibly Overvalued Closed-End Funds

Apr 18, 2014
Click here to access Avoid These Incredibly Overvalued Closed-End Funds

Many closed-end fund investors are quite well-informed. They understand the intricacies of relatively complex investment vehicles, diligently read the footnotes of their funds' annual and semiannual reports, and are disciplined enough to know when to buy and sell their holdings. However, it appears some investors less familiar with CEFs are willing to venture far outside their circle of competence for the sake of picking up some extra income. As a result, some CEFs that pay high distributions are occasionally driven up to exorbitant premiums. Experienced CEF investors generally steer clear of these funds, but this may not be as obvious a move for CEF newbies. 

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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.