It's best to invest your time before you invest your money.
And that holds true for closed-end funds or CEFs. "You have to know what you are doing and why you are doing it," says Daniel Silver, a CFA and portfolio manager at Zoso Capital.
And to do well, you'll have to be "pretty precise" about the details in the closed-end fund space, he says. "You have to know why you are buying something, what your expectation is, the reason you are doing it," Silver says.
What's more, it's well worth being aware of the data available on CEFs so that when the times comes, you feel comfortable with your decision to invest or not in CEFs.
- Closed-End Funds: Everything You Need to Know
- What Investors Should Know About Closed-End Funds or CEFs
- Closed-End Fund (CEF) Distributions, What You Need to Know
You can find CEF data, including the CEFs latest holdings, expense ratio, leverage and the like - on the fund sponsor's website as well as other websites ( https://www.cefconnect.com/ and https://www.cefa.com/)
"You have to do your homework," says Silver. "And you have to be aware of the nuances."
For his part, Bill Meyers, a senior managing director with Nuveen Investments, says investors should regard CEFs as "as great pieces of a portfolio to augment investor allocation" as well as a way to "generate high levels of income and maybe better levels of income than they might otherwise be able to get within an asset class."
To be fair, Meyers says CEFs do come with risks, "but again we think it's a great way to augment an overall portfolio."
Want to Buy $1 Worth of Stock for 90 Cents or Less? You can with certain so-called "closed-end" mutual funds - an often overlooked investment class. Click here to register for a free online video in which TheStreet's retirement expert Robert Powell and an all-star panel tell you all you need to know. The webinar is sponsored by Nuveen.