Quote:
Originally Posted by ReplayRandall
CEF's, unlike ETFs, offer very limited transparency. At any time, fund investors may not be aware of the future strategies the fund managers will employ.
This in turn, leads to the problems of CEF's being highly leveraged. Many CEF's invest using leverage (debt) as a large part of the overall strategy, thus making these funds far more volatile.
CEF's also have management fees that are considerably higher than the fees that come with ETFs or other passive type investments. These fees can quickly build up against any investor gains.
In closing, you can only sell a CEF IF you can find a buyer, as there aren't enough reliable buyers out there when it comes time to sell...…
Simply put, My Money goes elsewhere where it's safer and easy to liquidate at a moments notice...Just my opinion and experience, your results may differ.
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Fair enough. I’m not trying to talk you or anyone else into an investment they aren’t comfortable with. I will note that ETF’s and mutual funds also require a buyer and seller, not just CEF’s.
The scarcity of buyers drives the managers of ETF’s and mutual funds into liquidating assets at exactly the time they may want to be buying. The manager of a CEF shrugs his shoulder’s and looks for bargains since he doesn’t have to meet a demand for redemptions. The inability to sell a CEF at a reasonable price near NAV is actually a pretty good signal that you probably shouldn’t be selling it anyway.
@plainolbill: I understand CEF’s are excellent trading vehicles because of the obvious inefficiencies that occur when retail investors rush in and out. But I’m a long term holder of the bond funds I purchased. If you get a good entry point and are in it for the income generated, it doesn’t matter if you get a z score approaching +3 as recently happened wth one of my funds. I shrug my shoulders knowing there isn’t a great likelyhood the discount will narrow further but I’m not in it for capital gains (though they are really nice as a bonus).
Dan Ivascyn, Jeff Gundlach, and Larry Fink manage my bond portfolio. They charge a bit for it but it’s absolutely been worth it.
