CEFs trade throughout the day on exchanges just like ETFs and represent baskets of stocks, bonds or other holdings. But the kicker here is that unlike ETFs, which have a creation/redemption mechanism, closed-end funds issue a set number of shares when launched. The laws of supply and demand dictate what their value is. Essentially, what this means is you can buy $1 worth of stocks for, say, 95 or 90 cents. That’s built-in value.
CEFs also have the ability to use leverage to bolster distributions, which again makes them a great place to find big yields. And as an added bonus, many closed-end funds pay out their distributions on a monthly basis. If you’re looking to add some extra oomph to your portfolio, you might want to consider one or more of these CEFs: Voya Prime Rate Trust (PPR), Nuveen Municipal Value Fund (NUV), Credit Suisse High Yield Bond Fund (DHY) and John Hancock Tax Advantaged Dividend Income Fund (HTD).
Source: InvestorPlace
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