Closed-End Funds Paying Up to 11% Yield

The trick to buying closed-end funds is to pick them up them at a discount from their net asset value.

Similar to more-popular ETFs, closed-end funds hold baskets of securities, such as stocks or bonds. But, unlike with ETFs, the share prices of closed-end funds tend to diverge much more from the underlying value of their assets. As a result, closed-ends often trade well above or below their net asset value (NAV) per share. When a fund trades below its NAV, the discount is like a margin of safety, similar to buying a dollar’s worth of assets for 90 cents. Ideally, you want to buy a closed-end fund when it sells at a discount to NAV and wait for that discount to narrow, or even turn into a premium, enhancing the returns you get from the performance of a fund’s assets.

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Daren Fonda
Senior Associate Editor, Kiplinger's Personal Finance
Daren joined Kiplinger in July 2015 after spending more than 20 years in New York City as a business and financial writer. He spent seven years at Time magazine and joined SmartMoney in 2007, where he wrote about investing and contributed car reviews to the magazine. Daren also worked as a writer in the fund industry for Janus Capital and Fidelity Investments and has been licensed as a Series 7 securities representative.