Hi all,
I was wondering if anyone had looked into this investment approach? Closed-End funds are similar to ETFs in that they can trade "whole baskets" of stocks and trade on an exchange just like a stock and have a NAV.
A lot of times they either trade at a discount or a premium, but as I understand it, they generally revert to a mean.
So, my thinking is, short the ETF, buy the closed end fund (when at a discount) and wait to revert or the opposite if at a premium. This seems like a riskless arbitrage technique.
Anyone?
I was wondering if anyone had looked into this investment approach? Closed-End funds are similar to ETFs in that they can trade "whole baskets" of stocks and trade on an exchange just like a stock and have a NAV.
A lot of times they either trade at a discount or a premium, but as I understand it, they generally revert to a mean.
So, my thinking is, short the ETF, buy the closed end fund (when at a discount) and wait to revert or the opposite if at a premium. This seems like a riskless arbitrage technique.
Anyone?