Home>Video>Closed-End Fund Valuations Get More Appealing

Closed-End Fund Valuations Get More Appealing

Mon, 10 May 2010

During last week's turmoil, some closed-end funds popped up as being statistically undervalued, reversing a trend toward overvaluation.

+

Video Transcript

I'm -- my. So Eisner's bonus I don't mind me. Checking in on closed end fund valuations. Either on Scott Burns director of closed end fund and ETF researcher Morningstar. Joining me today is closed end -- strategist Mike Taggart Mike thanks for joining me is so over the past couple weeks we've seen a general market decline and then yesterday we had the did the market crash of 245. That is PM eastern. And the recovery so you know well with those general trends you know what have we seen in the closed end fund you what what was the stated closed -- -- market before yesterday. -- just overall this 621. Closed end funds out there. What we've seen it is. For last in saint month. They were all kind of training over toward the overvalued space so they're they're discounts and premiums were trending. Like higher seen it in some cases significantly Paris -- just a bassist and her three year average. Discounts or premiums and after yesterday's. And they actually act out over the course last week. We've seen them. Trends significantly and quickly. To the last towards this toward toward toward back towards more enormous space -- statement. For the first time in a month. We're actually seen some funds pop up as being statistically significantly. Undervalued. -- so we managed to go from a state of of overvaluation underbelly what do you think's really driving that. You know I I think a lot of it is you know these are. These discounts and premiums are. Are the price the share price relative to the net asset value and a lot of times you have investors. Who are just trying to get out of the market and they're anticipating. My further downside or further upside or whatnot and debt. Motivation -- that anticipation is reflected in in the any underlying shares of the fund's portfolio so the net asset value doesn't fall as quite as much as. Yeah as the share price does because of market behavior. And you know I mean who complain people -- yesterday for so you know it mechanics SoundBite I mean hopefully they didn't do that and but in some cases you know that happens. And so that's pretty much non you know on a lot of times what you'll see. On overseas markets is you know maybe there at the local market for for overseas. Closing funds the local market might start to you. You know stabilize. Bastard after selloff. And mom might -- to come back a little bit but investors in the US has really. They're gonna are gonna die just jump back everybody can immediately so -- That's a conscious of that and may not be going up and that but the interest in the fund still remaining -- pretty dormant exactly and a so you know and it sounds like who we went from a period where it was hard to find opportunities to a period where things are starting to look a little better on the opportunity from the closed end funds for. You know we like look at things on a three year basis. -- now because we think that investors you know should take a three year investment horizon so. You know there are starting to be some opportunities ended in. Displaced -- yet and the fixed income space for everything it was statistically significantly undervalued. But. You know the coming down to you and -- you know parent to say well you know I don't deferred current investors that is do you expect. I know it's possible that even there in the next few weeks if things persists like there's ever gonna start seeing some opportunities there as well. All right well thanks for the update. I'm Scott Burns director of closed end fund and ETF researcher Morningstar for this another ETF and closed end fund news and information please check out Morningstar dot -- ETF and closed end funds have.

  1. Related Videos
  2. Related Articles
  1. Discounts Make These CEFs the Cheaper Option

    ETFInvestor editor Sam Lee says Fed-taper fears have forced several closed-end funds to trade at discounts compared with ETFs or mutual funds of similar strategies.

  2. Rising-Rate Fears Create CEF Bargains

    As investors ditched certain income-producing assets on worries of rising rates, an abundance of fixed-income CEFs moved into undervalued territory, according to Morningstar's Cara Esser.

  3. Income Generation Top-of-Mind for CEF Investors

    A recent Morningstar survey found that current closed-end fund investors are using the vehicles for retirement income, but potential investors desire more education.

  4. Reasons for Excitement for CEF Investors

    The current environment is positive for CEF investors as more attractive discounts are coming to the surface, particularly with fixed-income vehicles, says RiverNorth's Patrick Galley.

  5. Caution Signs for CEF Income

    As fixed-income CEFs appreciate, investors seeking yield should be cognizant of bond rollover into lower-yielding assets as well as the added risk of leverage, says RiverNorth's Patrick Galley.

  6. What Will Higher Rates Mean for Levered Closed-End Funds ?

    With short-term rates remaining low, we don't anticipate an immediate impact on the cost of leverage financing for most CEFs .

  7. Opportunity Knocking for RiverNorth/DoubleLine Fund

    Interest-rate fear is a good thing for the recently reopened RiverNorth/DoubleLine Strategic Income fund, says portfolio manager Patrick Galley, who discusses his comanagement with DoubleLine's Jeffrey Gundlach.

  8. Looking Back on a Solid 2012 for CEFs

    Almost every closed-end fund had a positive performance this year, though equity CEFs are trading a discount compared with fixed-income funds, says Morningstar's Cara Esser.

©2017 Morningstar Advisor. All right reserved.