What are the risks associated with CEFs?
Investing in CEFs involves risks similar to those of other securities, including market volatility, interest rate risk, and the risk associated with the underlying assets. Additionally, the possibility of shares trading at a discount to NAV can add an extra layer of risk.
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What are the risks associated with UITs?
As with all investments, UITs carry risks, including market risk, interest rate risk, and the risk of issuer default, among others. The specific risks depend on the securities held by the UIT.
Are there any fees associated with CEFs?
CEFs may charge management fees and other expenses, which can vary by fund. Additionally, when buying or selling shares on the stock exchange, you may incur brokerage commissions.
How do CEFs differ from mutual funds?
Unlike mutual funds, which continuously issue and redeem shares based on demand, CEFs have a fixed number of shares. After the initial offering, shares of a CEF are bought and sold on the open market, which can lead to them trading at a premium or ...
How are CEFs priced?
The market price of a CEF is determined by supply and demand in the market and can differ from the fund's NAV. This difference can result in the fund trading at a premium (price above NAV) or a discount (price below NAV).
How are CEFs taxed?
The tax implications for CEF investors can vary based on the type of income the fund generates and how the investor holds the fund (e.g., in a taxable account vs. a tax-advantaged account). It's recommended to consult with a tax advisor to understand ...