Why do people buy closed-end funds?

Why do people buy closed-end funds?

Closed-end funds tend to pay out higher dividends to investors in part because they use leverage to help boost returns. Again, that works well in a rising market, less so in a falling one.

Is BST a good investment?

The latest premium on the fund isn’t outrageous and is worth considering here if you are a long-term investor. Additionally, BST remains one of the best choices for both growth and income in the CEF space.

What is a closed-end stock fund?

Closed-end funds are a type of investment company whose shares are traded in the open market like a stock or ETF. Capital does not flow into or out of the funds when shareholders buy or sell shares.

Are closed-end funds redeemable?

A closed-end fund generally is not required to buy its shares back from investors upon request. That is, closed-end fund shares generally are not redeemable.

What is the risk with closed-end funds?

CEFs are exposed to much of the same risk as other exchange traded products, including liquidity risk on the secondary market, credit risk, concentration risk and discount risk.

Does BST pay a dividend?

Model portfolio targeting 7-9\% dividend yield.

How are closed-end fund dividends taxed?

Most closed-end funds make capital gains distributions once each year, toward the end of the calendar year. The portion of a capital gains distribution reported by the fund as “short-term” generally is taxed to shareholders as ordinary income (in taxable accounts).

Why do closed-end funds return capital?

Return of capital is a choice To trade more competitively in the market, or to meet a stated goal of converting as much of the fund’s total return into regular cash flow as possible, the fund may wish to pay a higher regular distribution amount than regulations require.

Is a closed-end fund a 40 Act fund?

Closed-end funds are registered under the Investment Company Act of 1940, as amended (the “1940 Act”) and their shares are typically registered under the Securities Act of 1933, as amended (the “Securities Act”).

How do closed-end funds trade?

A closed-end fund is a type of mutual fund that issues a fixed number of shares through a single initial public offering (IPO) to raise capital for its initial investments. Its shares can then be bought and sold on a stock exchange but no new shares will be created and no new money will flow into the fund.

Are closed-end funds (CEFs) the right choice for You?

Closed-end funds (CEFs) are an attractive option for income investors who want a combination of a high amount of passive income and diversification. Too bad you rarely hear about them. Because of their big yields – the average CEF yields 7.3\%, according to data from CEF Insider – CEFs are especially popular with retirees.

What are the risks associated with investing in closed-end funds?

Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. There can be no assurance that fund objectives will be achieved. Closed-end funds frequently trade at a discount to their net asset value. NAV returns are net of fund expenses, and assume reinvestment of distributions.

What are the sources of historical distribution for closed-end funds?

Past performance is no guarantee of future results. Past performance is no guarantee of future results. Closed-end fund historical distribution sources have included net investment income, realized gains, and return of capital. For more detailed information on the distributions of a specific fund, please visit the sponsor’s website.

What are the best emerging-market CEF funds?

Emerging-Market CEF No. 1: Templeton Dragon Fund (TDF) First up is the Templeton Dragon Fund (TDF) which has lapped (and then some) the emerging-market index and the China-focused iShares China Large-Cap ETF (FXI).