In the comments of one of our recently published articles, we got into an interesting discussion about the value of investing in very high-yielding closed-end funds. Our intuition is that many of these funds have poor distribution coverage and high premiums, so our attitude has always been "buyer beware". However, we got some pushback to this view, so we decided to investigate further.
Because many such rules-focused investing discussions tend to devolve into repeated bouts of anecdotal evidence, we thought we would attempt a systematic analysis of the issue. So, in this article, we take