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Your Favorite Closed End Funds
Old 09-30-2009, 08:31 AM   #1
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Your Favorite Closed End Funds

I have bot some CLOSED END FUNDS in my retirement portfolio---DSU, AWF, HTD. Does anyone have CEF 's in their retirement account?
Do you have experience with these kind of funds?
And more important some of your favorite CEFs for future buys?
Raj Singh

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Old 09-30-2009, 11:15 AM   #2
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Why did you choose these funds--did someone suggest them? Also, do you have an asset allocation strategy that you are comfortable with?

I don't know anything about these or really any CEFs. I hope they do well for you over time.

Go Cubs
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Old 09-30-2009, 03:24 PM   #3
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I just transferred $6000 for ROTH IRA and decided that these are good income producing CEFs (DSU, AWF & HTD).
I am maging this money myself. My other retirement money is managed by Financial Planner which is under Assett Allocation (70% Bond, 30% Equity).
I want to build a separate income producing portfolio and have decided to experiment with CEFs.
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Old 10-01-2009, 02:08 PM   #4
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I have a few CEF's in the retirement portfolio, spread out in some small-percentage categories I want to keep for a broad asset allocation.

You can run screens here:

CEFA - Closed-End Fund Association

And here:

CEFConnect - Brought to you by Nuveen Closed-End Funds

Do your research and watch out for some gotchas that make CEF investing tricky.

  • Many (most?) CEF's have high management fees.
  • High discounts to NAV can be a value trap. While discounts have generally been narrowing during the market rally of the past few months, you may have to wait a long time for the discount to narrow on a particular CEF.
  • Many are thinly traded, so be sure to use a limit order when you buy.
  • Look at the income portion of the dividend payout, not just the posted dividend percentage rate. Many CEF's show a high nominal yield but a closer look shows a big chunk is actually a return of capital.
Search the forum for "CEF" and you'll find several threads on the subject.

One CEF I am continuing to buy as part of my fixed income allocation is TSI. It shows up in the screens as a fixed income or bond fund but it's really a more specialized MBS fund. I started buying last year when it showed up on a screen with high discounts, but didn't seem to have red flags otherwise. (The discount has since narrowed.)

The sponsor's web site should still have a link to the fund manager's web conference earlier this year. I was impressed on two levels. First was the fact that the fund / management company for the relatively small fund made the effort to go beyond just publishing a prospectus and return table. More importantly, I thought the manager showed a good grasp on market dynamics that could affect his investment strategy.
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