Money For the Rest of Us Should You Investment 100% of Your Retirement in Closed-End Funds?
Mar 26, 2025
Dive into the world of closed-end funds with fascinating discussions on their unique traits compared to open-ended mutual funds and ETFs. Explore various investing strategies, including opportunistic trading and the buy-and-hold income factory. Discover the impact of activist investors and the importance of reinvesting distributions. Strategies for selling after gaining 5% are also examined, providing a comprehensive look at how to manage and profit from closed-end funds.
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Closed-End Fund Overview
- Closed-end funds (CEFs) are a niche investment strategy, older than mutual funds and ETFs.
- They have a fixed number of shares and trade on secondary markets, with prices often diverging from net asset value.
CEFs vs. ETFs
- CEFs are shrinking in number due to their inferiority to ETFs.
- ETFs offer better tax efficiency and mechanisms to keep market price aligned with net asset value.
CEF Characteristics
- Closed-end funds focus on income generation, using leverage and managed distributions.
- Their fixed share structure provides permanent capital, allowing investment in less liquid assets.
