Closed-End Income Funds

There are actually quite a few investors who are not aware of closed-end income funds which can be quite profitable for many. A closed-end income fun is very similar to that of a mutual fund except one of the biggest differences is that with one of these no new money will be able to enter in after the initial offering. All shares trade in accordance with regulated prices which are determined by the value of securities in the fund itself. These funds can be extremely varied, as much so as the managers who are in charge of running them. Certain funds and managers specialize in specific things such as foreign stocks and bonds as well as income-producing securities. Others tend to focus on strategies which are related to options.

The TCW Strategic Income Fund is one of the better closed-end income funds which invest in a wide range of securities, some of which include convertible bonds and high yield debt along with preferred shares. From October of 2010 the stock is up around 250% from 52-week lows, a somewhat impressive statistics which those who are considering one of these funds should think about before making a decision either way. TSI yield 6.2% each year and trades at a discounted 7.33%. This fund has been around for a total of thirty years and it deals heavily in Collateral Mortgage Obligations, otherwise known as CMOs. Nine out of the top ten holdings for this fund are completely devoted to these as well as certain other mortgage-backed securities.

PIMCO’s Global StockPLUS Income Fund is definitely one of the better funds out there to choose from and it has appreciated a total of 150 % in the last six months which means that it is a great option for those who are looking to make as much money as possible on their initial investment. It is currently yielding an interest rate of 13.70% and the fund itself is a combination of equity index derivatives and investment-grade bonds. Those who are looking to make a significant amount of money back on their investment will certainly want to consider this as a viable option.

A closed-end fund is essentially a publicly traded investment company which is able to raise a certain amount of money through what is referred to as an initial public offering or an IPO. The fund is listed just like stocks are on a stock exchange so it isn’t much different from doing that really, something that people who are familiar with stocks will enjoy. Sometimes these funds are known as “closed-end investments” or “closed-end mutual funds” and with the right decisions and information you will be able to make a significant amount of money from them. Mutual funds are known as open-end funds and they really do not have that much in common with closed-ended funds.

After a fixed number of shares are issued a fixed amount of capital can be raised through an IPO which is standard practice with this type of fund. The shares are then purchased by investors as stock in this type of fund, so those who are already familiar with the stock exchange will want to think about investing their money in a closed-ended fund. Certain market forces determine the final price of stocks, such as supply and demand which are two very important factors to consider. The more you know about these forces the better your decisions will be regarding what you wish to do with your money in this type of fund. Another factor which is important in determines the price of stocks is the changing values of securities in the holdings of this type of fund.

It is important to keep in mind that this type of investment does not always pay off the way you will want it to, which is why it will be extremely important for you to consider all of the factors which can help you to make as much money as possible and reduce your risk as far as losing your investment is concerned. An increasing number of people have started to invest in these funds because of the fact that they work so well to help give back a significant return on an initial investment. There are quite a few of these closed-ended funds to consider which is why it is important that you take all the time necessary to determine which one you will want to get involved with, because not all of them will be worth investing in.

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