IHTA - Play The Odds With Term Funds: Annualized Gains Up To 15%
2024-04-11 16:03:09 ET
Summary
- There are three types of closed-end fund structures: perpetual, term, and target term. Term funds aim to minimize the discount at which the fund trades versus its share price.
- Today we have four funds that are nearing their completion dates. JPI, DCF, CBH, and IHTA. We'll go through them one-by-one.
- Term funds are similar to buying a discounted bond that is nearing its maturity. There are a few other risks that are involved here.
- Investors are more handsomely compensated for this risk with close to equity-like returns, lower than equity risk, and much greater visibility.
- Use limit orders to gain entry into these.
In the world of closed-end funds, ("CEFs") there are three types of fund structures.
- Perpetual : As it sounds, the fund has a perpetual mandate and continues to operate 'forever'
- Term : This fund has a specified date in the future when it will self-liquidate at NAV.
- Target Term : This type of fund not only has a specific date in the future where it will liquidate, but it also has a target price it will liquidate at.