Closed-end funds, a tremendous fund-type has rolled around in recent years. Choose any form of investment, asset class and level of diversification … a CEF can get you involved in just about any form of security that exists. Close-ended funds are better than mutual funds. You don’t have to worry about the closing price because you can trade a CEF instantly. The disadvantage to closed-end funds is that their expense ratios may be high compared to their exchange traded fund cousins — around 1.45%. However, because we are looking at high-yield, closed-end funds, that expense becomes less important. Here are three of the best CEFs to choose from...
Guggenheim Enhanced Equity Income Fund. (GPM) is a “buy-write” fund that purchases securities and then sells call options against those securities. It wants broad exposure to the equity markets through stocks and ETFs. The options are either out of the money or at the money, and usually are for a single month contract, although others can be used. The fund collects dividends on the equities it holds to enhance returns. The Liberty All-Star Equity Fund (USA) is a mixed fund that jams five different managers together — three in value oriented strategies and two in growth — to form this large-cap CEF. Hey, five heads are better than one. The Cohen & Steers Limited Duration Preferred and Income Fund (LDP) is one of my favorites. I am a big fan of preferred stocks because these issues offer exceptional safety and comparatively generous yields. They trade more like bonds, in a tight trading range, so there tends to be very little risk of losing your capital. However, they provide yields that are like junk bonds without the risk that those same bonds have.
Source: InvestorPlace
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