PCEF - ETFs Of Closed-End Funds: Unexpected Growth Opportunities

2024-06-21 08:00:00 ET

Summary

• The universe of ETFs of CEFs is small, but Invesco CEF Income Composite ETF has significantly more assets and a longer history than the rest.
• PCEF diversifies away some risk, but it is more concentrated among a few managers than the broader CEF universe.
• Indexing isn’t always perfect, but indexed products like PCEF help reduce some of the risk behind security selection while following opportunities in the broader universe in unexpected areas like healthcare tech, science, and technology.

For income-seeking investors, closed-end funds (CEFs) offer relatively high distributions and the potential to buy these shares at a discount to the fund's NAV. But these are lesser known fund structures. So many advisors and investors unfamiliar with CEFs may opt to invest in them through a familiar wrapper like ETFs....

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