Morningstar, Inc. Commentaries
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.