STEW - BDJ And SPE: Double Digit Discounts And Monthly Distributions
2024-07-01 16:16:32 ET
Summary
- Investing in closed-end funds offers opportunities to exploit discounts and premiums, potentially leading to increased upside.
- BlackRock Enhanced Equity Dividend Fund and Special Opportunities Fund are currently trading at large double-digit discounts, and that can make them compelling investment options.
- Both funds offer monthly distributions to investors as well, which can make it easier to be patient in holding these funds over the long term.
Written by Nick Ackerman, co-produced by Stanford Chemist.
One of the main benefits of investing in closed-end funds is taking advantage of the discounts and premiums of these investment structures. The funds aren't asset classes themselves, but are wrappers for other assets. That said, these discounts/premiums can be exploited due to share prices trading below or above the net asset value per share.
A fund trading at a premium doesn't always necessarily mean it is expensive, as looking at relative discounts/premiums can play a greater role in a reversion to the mean play. Being able to pick up a position in a fund that is trading at an abnormally large discount can provide an added advantage to the potential upside....
BDJ And SPE: Double Digit Discounts And Monthly Distributions