CEF's

[Mr Nice Guy]

Anybody invest in these? Somebody told me to check these suckers out, as an income investment, and to own a basket of stocks for little capital.

I was told to check out CEFConnect - Brought to you by Nuveen Closed-End Funds to get started. Like thomsoad said in another thread about utilities, i am not sure how to analyze these and wondering if anyone has any tips.

[jpg7n16]

A CEF is just a closed-end fund. It's virtually identical to a mutual fund, except it's not priced at NAV, it's priced at a market price.

You should evaluate CEFs the same way you'd evaluate any mutual fund.

Check management history, check historical returns, check fees and expenses, check asset allocation, check investment objectives of the fund (tech stock, small cap, large cap, bond, income, etc.) in other words, 'what type of fund is it, and is that what you want?'

And then you have an additional check of is it trading at a discount/premium? Is it still worth it to invest even with the premium? etc.


Sometimes you can find good funds trading at a discount. Which I think it funny.

Kinda like, 'so if I bought all these securities separately, they'd cost $100, but for some reason when you combine them, they only cost $90? cool.'


As far as practical implications to a normal investor, a CEF is not really different than a mutual fund or an ETF.

[Slug]

Sometimes you can find good funds trading at a discount. Which I think it funny.

Kinda like, 'so if I bought all these securities separately, they'd cost $100, but for some reason when you combine them, they only cost $90? cool.'


As far as practical implications to a normal investor, a CEF is not really different than a mutual fund or an ETF.

Just a note that just because it's trading at a discount now doesn't mean it's going to recover to trade at par value or a premium. It could trade down to an even deeper discount. It's just one more variable to consider. Thus, I avoid them because it's one less thing for me to worry about.