No Real Bargains in Closed-End Funds

What will you be doing in the final weeks of the year 2017?

If you are currently salivating over the widening discounts on most closed-end funds, we can make a guess: There is a reasonable probability that a decade hence you will still be waiting for them to reward you by moving to premiums to their net asset value.

And waiting, and waiting! Well, maybe they'll make it to premiums for our nation's semiquincentennial celebration -- in 2026.

Closed-end funds issue a fixed number of shares that trade on an exchange, like stocks. When markets tank, or their investment strategies fall out of favor, their share prices can trade at big discounts to the value of their portfolios. For a long time.

Shoppers might be finding bargains among the holiday gifts being offered by retailers at start-of-the-season discounts. But investors itching to snatch up shares of closed-end funds because of recently bloated discounts are liable to be stuck for an inordinately long time waiting for the market quotes of their holdings to surpass their respective net asset values per share.

Four weeks ago, 90.2% of closed-end funds were priced at discounts from their respective net asset values per share. That has broadened recently to 93.5%. More significantly, the discount on the average fund has widened from 7.76% less than a month ago to a recent value of 9.96%.