EIC - The Alchemy Of Closed-End Fund Investing: Turning 6% Yields Into 9% Distributions
- Many investors are suspicious of closed-end funds' apparently magical ability to buy assets whose "natural" yield is, for example, 6%, and pay distributions of, say, 9%.
- Is there some sort of alchemy at work here? Often when things seem "too good to be true," they are too good to be true.
- Is this one of those cases, or is there some logical, credible explanation here? A real Rumpelstiltskin lurking in the background spinning straw into gold?
- The fact is, the financial "alchemy" at work here is very real and totally credible; it's name is not "Rumpelstiltskin" but rather "discounts" and "leverage"
For further details see:
The Alchemy Of Closed-End Fund Investing: Turning 6% Yields Into 9% Distributions