- We have been discussing tight valuations and ways to reduce risk including shifting to open-end mutual funds as you wait out valuations.
- Another option is shifting to term funds as a mechanism for reducing downside risk and creating that positive skew amidst rich discounts.
- We examine positive skew, which is the amount of upside potential vs. downside risk. The larger the discount, the greater the positive skew.
- Term funds have a tether attached to their NAVs preventing some downside skew. These can be a great "placeholder" when perpetual CEFs are richly priced.
For further details see:
Using Term Funds For A Source Of Cash During Market Sell-Offs