This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Closed-End Fund Is Reopening as an ETF

The shareholders of the $540 million (FVD ) have come up with an unusual solution to the closed-end fund's persistent tendency to trade at a discount to its net asset value: It's being reorganized into an exchange-traded fund.

Value Line Dividend ceased trading on the American Stock Exchange on Friday. The fund's assets will be transferred to, and its liabilities assigned to, the newly created First Trust Exchange Traded Fund, which starts trading Monday under the same ticker symbol as its predecessor.

Shares of the ETF, which will track an index designed with a similar focus on dividends and capital appreciation, are being distributed to the closed-end fund's shareholders on a tax-free basis.

It's not unusual for closed-end funds to trade at a discount to the value of their holdings. That's because, unlike open-end funds, which issue and redeem shares upon request at net asset value, closed-end funds issue a fixed number of shares that can only be traded on an exchange. So the price of a closed-end fund with a net asset value of $100 per share can fall to $90 a share, or a 10% discount to its NAV, if there isn't a lot of demand for the product.

This was basically the case with Value Line Dividend. Between Jan. 1 and May 31, its discount to NAV averaged more than 12%. However, the discount has since been more or less eliminated, perhaps because investors bid up the stock price in anticipation of the reorganization. The discount shrank to 9% in June and was only about 1.3% at the end of November, according to ETFConnect.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FVD $25.76 -0.19%
AAPL $92.97 -0.69%
FB $117.96 -0.08%
GOOG $700.10 0.63%
TSLA $212.39 -4.60%


Chart of I:DJI
DOW 17,642.77 -8.49 -0.05%
S&P 500 2,048.97 -2.15 -0.10%
NASDAQ 4,720.2720 -5.3670 -0.11%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs