- Income dividends pass through to shareholders the interest or dividends collected by the fund, net of expenses, according to the CEFA. Fixed-income CEFs typically pay out income dividends monthly or quarterly and these dividends are generally taxable to shareholders as ordinary income (if held in a taxable account). Income dividends paid by municipal bond funds are exempt from certain taxes.
- Capital gains distributions pass through to shareholders the "realized" capital gains of the fund, net of expenses. But, what's really important to know is the fund's policy toward distributions and whether the fund does anything to "smooth" distributions, says Bill Meyers, a senior managing director with Nuveen Investments.
- Closed-End Fund Managers Actively Try to Stay In Touch With Clients
- Need Some Income for Your Portfolio? Consider Closed-End Funds
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