Description
This article is from the A Guide to
Closed-End Funds (CEFs).
Volatility of CEFs
Many of the CEFs invest in exotic markets---South African gold
mines (ASA), warrants (EWF), or emerging markets (IGF, CRF). Swings of
10% daily are not uncommon; sometimes, markets may move as much as 50%
in a week. For conservative investors, such volatility may be
undesirable---they may prefer some of the diversified domestic CEFs
which are steady and reliable. Most mutual funds do not invest in such
markets, since liquidity and panic redemptions are a major
concern.
Again, for the savvy CEF investor, volatility may present
opportunities unavailable to the mutual fund investor. A volatile
fund will swing from discounts to premiums more often, thereby
presenting more opportunities to trade.
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CEFs, closed-end fund, premium, discount, volatility, trading, investing, leverage, yields, buying, selling, shares, money, funds, mutual funds, adventages, disadvantages, liquidity, commissions, brokers, source, information, reference
