CEFs, like other funds, track a basket of securities. However, unlike other open-ended funds, CEFs only issue a fixed number of shares, so CEFs may experience wider premiums or discounts to its net asset value.
CEFs may also utilize leverage to augment distributions, which helps the securities generate big yields, as can be seen with XMPT. More over, XMPT provides distributions on a monthly basis for those income-oriented investors.
XMPT acts like a fund of funds. The ETF’s top holdings include 4.3% BlackRock Municipal Target Term Trust (BTT), which has a 4.74% distribution rate; 4.2% Nuveen Municipal Value (NUV), which has a 4.02% distribution rate; and 3.6% Nuveen Insured Municipal Opportunity Fund (NIO), which has a 6.38% distribution rate.
Financial advisors who are interested in learning more about municipal bonds can register for the Wednesday, September 16 webcast here.