CEFs are a consummate double-edge sword. On the surface, investors find a neatly packaged, diversified security typically with above-average cash flow generation capability. On the other hand, leverage employment, operational complexity, and a slew of variables can cause headaches and potentially unsuspecting risk exposure for the unsophisticated investor.
The "Distribution"
One of the most troublesome and frequent mistakes the average investor makes is equating the CEF distribution with the dividend yield of a common stock. Some investors may see a 7% CEF distribution and may automatically see superiority therein compared to a company with a