2 Massive Dividends (Up to 13.7%!) About to Collapse

By Michael Foster

Right now, there are two closed-end funds (CEFs) you need to sell immediatelyaEUR"or steer clear of if you donaEURtmt already own them.

Before I reveal them, I want to explain the unmistakable sell signal both are showing as I write this. You can easily use it to aEURoecrash-testaEUR the CEFs in your own portfolio, or spot CEF bargains.

A Built-in CEF aEURoeSell AlertaEUR

IaEURtmm talking about the difference between the fundaEURtms market price and per-share net asset value, or NAV (which is just another way of saying the value of the CEFaEURtms holdings).

CEFs usually trade at a discount to NAV, and if youaEURtmre a subscriber to my CEF Insider service, you know weaEURtmve banked some impressive returns by waiting for those discounts to get ridiculously wide, buying, then holding on as the discount reverts to normal, pushing the share price higher as it does.

ThataEURtms a proven way to build wealth in CEFs, but thereaEURtms one problem: sometimes folks completely ignore it, or forget to sell when the discount gets too narrow, or even flips to a premium. In those cases, the aEURoesnap backaEUR to the downside can wipe out your profits!

And bear in mind that a premium is a dead-obvious signal that investors are overpaying for a fund.

These days, too many investors are ignoring this warning sign. ThataEURtms a big mistake, especially now, with fears like the trade war making the market cautious. That caution is seeping into the CEF world, meaning those overpriced funds will soon face a reckoning.

Which brings me to aEUR

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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