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Why Closed-End Funds Are More Appealing During Market Turmoil
Yeah, I can tell they are "more appealing" by the ever-growing discount, and by their volatility -- which can often be 2X or 3X of equity indices on down days.
That link is a real "puff piece" -- neglects to mention that CEFs often OVER-distribute their portfolio earnings -- which eventually leads to a) distribution cuts and a consequent significant, sudden drop in the market price and/or b)ongoing erosion of the NAV.
It also neglects to mention a) CEF management usually does little to actively attempt to shrink discounts, but b) CEF managements to engage in 2ndary and ongoing "at-market" offerings -- both of these management behaviors work to the detriment of CEF shareholders.
But hey, nothing like an industry puff-piece to mislead folks who are enticed by high "yields" (which, since they are not always earned, are not really yield...)
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Yeah, I can tell they are "more appealing" by the ever-growing discount, and by their volatility -- which can often be 2X or 3X of equity indices on down days.
That link is a real "puff piece" -- neglects to mention that CEFs often OVER-distribute their portfolio earnings -- which eventually leads to a) distribution cuts and a consequent significant, sudden drop in the market price and/or b)ongoing erosion of the NAV.
It also neglects to mention a) CEF management usually does little to actively attempt to shrink discounts, but b) CEF managements to engage in 2ndary and ongoing "at-market" offerings -- both of these management behaviors work to the detriment of CEF shareholders.
But hey, nothing like an industry puff-piece to mislead folks who are enticed by high "yields" (which, since they are not always earned, are not really yield...)