Closed-End Funds

PBS’s Nightly Business Report on December 23rd interviewed an expert on closed-end funds. Like (open-end) mutual funds, these are pools of money invested in a diversified portfolio. Unlike mutual funds, these may trade at a discount or premium to the net asset value of the securities they pool, creating opportunities for gains based on supply and demand. Investopedia has an introductory article. ETFConnect provides some free research. The expert noted that several funds exhibit a pattern of trading at a significant discount in December, and at a premium in January. Apparently this is due to investors selling at the end of the year for tax purposes. Furthermore, these funds can also pay dividends.

Paul Kangas reviewed the attractive gains made on the expert’s recommendations from last year, and asked him for more recommendations, which I think are worth looking at. The yields on these funds are quite attractive, making them reasonable to hold even if the December-January jump turns out to be modest. Recommendations included

Tags: Business

Updated at: 29 December 2005 1:12 AM