Market volatility has hindered closed-end funds (CEFs) good run, as they are unable to weather the market conditions the same way exchange traded funds (ETFs) have. Many CEFs have been suffering losses up to 15-20% off their summer peaks, reports Steven Syre of The Boston Globe. CEFs tend to be sensitive to downturns when financial markets get shaky. Share prices suffer if no buyers materialize, and the underlying investments are at risk. CEF shares are well below their net asset value.
Provider Eaton Vance raised billions for highly anticipated rollouts of income-oriented CEFs that aimed for income at 9% per year. Unfortunately, these funds have only suffered losses. Pioneer’s Diversified High Income Trust is down 22% since the end of June and Evergreen’s Global Dividend Opportunity Fund is down 20% since July, at only 4.5 months old.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.