Retirement & Financial Planning Report

Closed-end funds are mutual funds that trade like stocks. Advantages include:

  • No cash necessary. The managers of these funds don’t have to hold cash to meet possible redemptions so they can be fully invested in higher-payoff stocks or bonds.

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  • No redemption headaches. Closed-end funds aren’t being forced to buy at market tops, when investors pour money into the market, or to sell into market corrections, when redemptions pick up.

  • Discount buying. Closed-end funds typically trade at a discount to the stocks and bonds they hold so you can buy $1 worth of securities for 85 or 90 cents.

Over the past 13 years, the Herzfeld Closed-End Average (shown each week in Barron’s) has outperformed the Dow industrials by around 30%. For more on closed-ends, go to www.herzfeld.com.