BIGZ - Finding Opportunities In The Closed-End Fund Market

• CEFs may be more susceptible to tax loss selling given they trade on a stock exchange and market prices (investor return) can deviate from underlying NAVs (fund return). Additionally, CEFs typically provide income to shareholders through monthly distributions.
• These dynamics may create an opportunity for the investor to realize a “tax loss”, even when the total return is positive.
• The CEF market has been strong in 2021, with market price returns and NAV returns positive across most sectors. Given this dynamic, tax loss selling should be muted in 2021.
• That being said, it’s also important to note that while a CEF could have a positive total return, a large portion of that return could be from distributions, potentially triggering some year-end tax loss selling if the investor’s cost basis is higher than the current price.

For further details see: