Keeping Up with Exchange Traded Funds
Jason Zweig warns investors against chasing high yields offered by some closed end funds in the column High Yields Aren't Always a Good Thing.
Problem number one arises from the fact that the yields posted by the funds can include both income and return of capital. Income, of course, is a good thing, but return of capital simply means that you are getting back a portion of what you have already paid for -- why get excited about that?
The second issue Zweig highlights is that investors are paying a premium over net asset value (NAV) for high yield funds. Turns out that 11 of the roughly 650 closed-ends tracked by Lipper Inc.Continue Reading »
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