The Closed End Fund Portfolio

Closed end funds can be a solid investment and provide unique ways to diversify. I have been investing in closed end funds for fifteen years now. I do not keep a significant portion of my assets in closed end funds but using the methodology outlined in the hub Make Money in Closed End FundsI have never lost money in a closed end fund.

There are as many closed end funds available as open end funds. To qualify for this portfolio the fund must be a well run fund with a good track record and be selling at a handsome discount. The concept of discount is laid out in Make Money in Closed End Funds as well as other sources on the internet. The Closed End Fund Association is an excellent source for more data on closed end funds including discount and performance. Also missing from this portfolio are highly specialized funds such as funds that invest in single sectors or countries. Many of these funds are excellent investments but should be kept to a very small portion of an investor’s portfolio.

The list of recommended funds is as follows

Royce Value Trust symbol RVT

This fund has yielded a 35 percent return in 2010 and has yielded 8.4 percent over the last decade. This fund is run by Charles Royce who is in my opinion one of the best managers in the business. The fund invests primarily in small cap companies. At the time of writing this fund enjoys a 13.1 percent discount to the market.

Aberdeen Asia-Pacific Income Fund symbol FAX.

This fund is a bond fund which invests globally this fund was up 15.7 percent in 2010 and has yielded 14.22 percent over the last 10 years. The fund has been paying a monthly dividend of 3.5 cents per share which makes it a nice income generator for those wanting an income stream.

Royce Micro Cap Trust symbol RMT

This fund is also run by Charles Royce. This fund tends to focus on the micro cap area of the market. The fund was up 34 percent in 2010 and up 10.37 percent for the decade. This fund trades at a 13.6 percent discount as I write this hub.

Gabelli Dividend & Income Trust symbol GDV

This fund is run by the legendary Mario Gabelli. The fund focuses on dividend paying stocks. This fund has been paying a 6 to 7 cent per share dividend monthly. This fund was up nearly 24 percent in 2010 and up 5.3 percent per year over the last five years.

Lazard World Dividend & Income Fund symbol LOR

This fund is more global than the Gabelli fund above but invests primarily in dividend paying stocks. This fund pays a 7 cent per share dividend on a monthly basis. This fund was up nearly 24 percent in 2010 and up over 7 percent per year over the last five years. This fund is trading at a 7 percent discount to the market price at this time.

At this time there are no other closed end fund I am recommending. Many are just not well run funds while others are not selling at a discount. Do not be fooled into buying a fund because it has a nice discount.

Closed end funds can be a nice addition to your portfolio. Because they trade like stocks they can be bought and sold with limit and stop orders which many investors find desirable.

Closed end funds can be a solid investment and provide unique ways to diversify. I have been investing in closed end funds for fifteen years now. I do not keep a significant portion of my assets in closed end funds but using the methodology outlined in the hub Make Money in Closed End FundsI have never lost money in a closed end fund.

There are not as many closed end funds available as open end funds. To qualify for this portfolio the fund must be a well run fund with a good track record and be selling at a handsome discount. The concept of discount is laid out in Make Money in Closed End Funds as well as other sources on the internet. The Closed End Fund Associationis an excellent source for more data on closed end funds including discount and performance. Also missing from this portfolio are highly specialized funds such as funds that invest in single sectors or countries. Many of these funds are excellent investments but should be kept to a very small portion of an investor’s portfolio.

Closed end funds can be a nice addition to your portfolio. Because they trade like stocks they can be bought and sold with limit and stop orders which many investors find desirable.

While having the closed end funds will go a long way towards meeting your financial goals as investor more diversification is highly recommended. Develop your own asset allocation and invest in the best funds in those asset classes. Once the investor has their asset allocation select the small cap best mid cap, large cap, small cap, global, bond, and even concentrated portfolio funds for their portfolio.

Investor with an aversion to risk should consider balanced fundsor even the funds outlined in The Low Risk Portfolio.