I remember learning something about Closed-End Funds (CEFs) when I was perusing finance and investment literature to get some decent educational exposure. I'm having a bit of a hard time figuring out exactly if and how to use them, though, or when to choose one over a similar MTF or ETF.
In my inherited accounts from my grandfather there are a couple in there, BKT (an MBS fund) and DUC (corp bond fund). I'm not a huge fan of these for a few reasons: I'm already a bit above my expected bond allocation anyway, to be evened out later this year by retirement contributions into equities, and I don't really have a good grasp exactly as to how these work. Having a trading price different from NAV and having a significant amount of leveraged debt built into the fund is just a bit different than what I'm used to and makes it a bit odd to figure out how to use them properly. I get that one of their primary points is to provide income (not thrilled to find one in a taxable), and that they're not subject to some of the regulations usual "open-ended" MTFs and ETFs are...
I'm inclined to sell them since I can find better uses of them and since I don't need much fixed-income holdings at this point, but does anyone use CEFs, why, and to what extent?
In my inherited accounts from my grandfather there are a couple in there, BKT (an MBS fund) and DUC (corp bond fund). I'm not a huge fan of these for a few reasons: I'm already a bit above my expected bond allocation anyway, to be evened out later this year by retirement contributions into equities, and I don't really have a good grasp exactly as to how these work. Having a trading price different from NAV and having a significant amount of leveraged debt built into the fund is just a bit different than what I'm used to and makes it a bit odd to figure out how to use them properly. I get that one of their primary points is to provide income (not thrilled to find one in a taxable), and that they're not subject to some of the regulations usual "open-ended" MTFs and ETFs are...
I'm inclined to sell them since I can find better uses of them and since I don't need much fixed-income holdings at this point, but does anyone use CEFs, why, and to what extent?
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