Mon, 9 Dec 2013
Demand for U.S. equity and global all-asset strategies highlights advisor interest this year.
With short-term rates remaining low, we don't anticipate an immediate impact on the cost of leverage financing for most 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.
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.
Morningstar's Steve Pikelny cautions closed-end fund investors to be aware of the risk/reward trade-offs as well as high premiums when searching for extra yield.
Debt in developing markets is not as risky as some think, and closed-end funds are good vehicles to take advantage of the higher yields in these regions.
A recent Morningstar survey found that current closed-end fund investors are using the vehicles for retirement income, but potential investors desire more education.
Although the asset class saw some changes during the first six months of 2012, the numbers were somewhat similar to those at the 2011 midpoint.
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.
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