Closed-end stock funds are finding their potential with veteran investors who see their current average discounts as an opportunity. In an article from Fidelity.com, the potential of closed-end funds are explored for their new potential as higher yielding options. CIA’s Mitch Reiner comments on their potential and their risks.
“Closed-end stock funds can be more volatile than traditional stock funds, and knowing when to buy and sell is key”, says Mitchell Reiner.
Reiner suggests investing in funds when their discounts are above their peer group or long-term average. If their prices spike to a narrow discount or premium it may be time to rotate into cheaper funds. And it’s important not to panic if the share price dives temporarily due to a broad market sell-off, for example:
The Six Leading Closed-end Funds to Consider
1. Adams Express
2. Tri-Continental Corp.
3. Royce Value Trust
4. AllianzGI Equity & Convertible Income Fund
5. Virtus Total Return Fund
6. Macquire Global Infrastructure Trust Fund