Strategic Selections: Unveiling 5 Discounted Closed-End Funds with High Yields

Best Closed-End Funds (CEFs) to Buy Now : – The best closed-end funds will significantly boost your portfolio income and allow you to buy their underlying stocks and bonds at a discount.

In the realm of investment opportunities, closed-end funds (CEFs) stand out as a compelling option to enhance portfolio income while capitalizing on discounted assets. Let’s delve into what makes these funds unique and explore some of the best options currently available in the market.

Understanding Closed-End Funds

Before we dive into specific funds, it’s crucial to grasp the fundamentals of closed-end funds. Unlike their open-ended mutual fund counterparts, CEFs operate with a fixed number of shares, akin to stocks. This means that investors purchase shares through initial public offerings (IPOs) and subsequently trade them on the stock market, similar to buying and selling stocks of individual companies.

One distinguishing feature of CEFs is their propensity to trade at discounts or premiums to the net asset value (NAV) of their underlying assets. While premiums are generally avoided, discounts present lucrative opportunities for investors, as they offer the chance to acquire assets below their intrinsic value.

Moreover, CEFs have the flexibility to employ debt leverage, allowing them to amplify returns and generate higher yields compared to traditional mutual funds. This leverage, coupled with discounted assets, positions CEFs as attractive income-generating vehicles for investors seeking robust returns.

Exploring Top CEFs

Now, let’s examine a selection of top-performing CEFs that combine attractive discounts to NAV with competitive or generous yields:

Nuveen Real Estate Income Fund

• Overview
  • Market Value: $228.5 million
  • Distribution Rate: 8.6%
  • Discount to NAV: -11.6%
  • Expenses: 3.64%*

In the volatile landscape of real estate investment trusts (REITs), the Nuveen Real Estate Income Fund (JRS) stands out as a beacon of opportunity. REITs, long regarded as a reliable income source akin to bonds, faced turbulence when bond yields surged, causing REIT prices to plummet in tandem. However, amidst this upheaval lies a silver lining: the chance for investors to acquire premium real estate assets at discounted rates.

Why Consider JRS?

1. Discounted Access to Quality Assets: JRS offers investors access to a diversified portfolio of REITs, including prominent names like Prologis (PLD), Equinix (EQIX), and Public Storage (PSTG), all at a notable discount to their Net Asset Value (NAV).
2. Attractive Yield: With a distribution rate of 8.6%, JRS presents an enticing income opportunity, particularly in a climate where yields elsewhere may be less favorable.
3. Inflation Hedge: Real estate has historically proven resilient against inflation, with property values and rental incomes often adjusting to match or exceed inflation rates. JRS provides exposure to this inflation-resistant asset class.

Navigating the Landscape

As the Federal Reserve grapples with inflationary pressures, the future remains uncertain. Yet, irrespective of the inflationary trajectory, real estate holds its allure as a tangible asset with intrinsic value. Whether inflation recedes or persists, JRS remains a prudent avenue for investors seeking to fortify their portfolios with real estate exposure.

Expense Breakdown

• Management Fees: 1.21%
• Other Expenses: 0.12%
• Interest Expenses: 2.31%

Total Expenses: 3.64%

For those keen to delve deeper into JRS, additional information is available at the Nuveen provider site.

Nuveen Credit Strategies Income Fund

• Overview
  • Market Value: $748.6 million
  • Distribution Rate: 11.7%
  • Discount to NAV: -7.2%
  • Expenses: 4.27%*

In the realm of potential economic downturns, the Nuveen Credit Strategies Income Fund (JQC) emerges as a resilient contender. Positioned to weather market fluctuations, JQC offers investors an opportunity to navigate potential recessions with confidence.

Why Opt for JQC?

1. Focus on Floating-Rate Loans: JQC’s investment strategy centers on floating-rate loans, a prudent choice in anticipation of Federal Reserve interest rate adjustments. These loans stand to benefit from rate hikes, bolstering the fund’s resilience amidst economic shifts.
2. Managed Credit Risk: While JQC embraces credit risk through its portfolio of predominantly below-investment-grade loans, it mitigates this risk by prioritizing first-lien positions in 80% of its holdings. This strategic positioning ensures a safeguarded position, backed by tangible collateral.
3. Diversification: With a well-diversified portfolio, JQC distributes its risk across a range of assets, offsetting the inherent volatility associated with second-lien loans, which constitute 20% of its holdings.

Anticipating Returns

The potential for robust returns underscores JQC’s appeal, solidifying its status as a top closed-end fund option. Trading at a 7.2% discount to NAV, JQC offers investors not only a high yield of 11.7% but also the prospect of capitalizing on the narrowing discount as market sentiment improves.

Expense Analysis

• Management Fees: 1.33%
• Other Expenses: 0.13%
• Interest Expenses: 2.81%

Total Expenses: 4.27%

For those seeking further insights into JQC, comprehensive information is available at the Nuveen provider site.

Ecofin Sustainable and Social Impact Fund

• Overview
  • Market Value: $154.5 million
  • Distribution Rate: 9.4%
  • Discount to NAV: -22.1%
  • Expenses: 2.28%*

Delving into the realm of closed-end funds (CEFs), the Ecofin Sustainable and Social Impact Fund (TEAF) emerges as a distinctive player, poised to deliver both financial returns and societal benefits. Despite its unconventional profile, TEAF presents a compelling opportunity for investors seeking to align their portfolios with sustainable and socially impactful initiatives.

Why Choose TEAF?

1. Discounted Investment with Term Fund Potential: TEAF’s deep discount to NAV offers investors an attractive entry point, with the added allure of a term fund structure. Designed to liquidate in 2031, TEAF provides a unique avenue for investors to capitalize on the narrowing discount over time, alongside enjoying a robust dividend yield of 9.4%.
2. Diverse Portfolio: TEAF’s investment strategy encompasses a diverse array of traditional and alternative energy assets, spanning both public and private sectors. While its eclectic nature may deter some investors, it underscores TEAF’s commitment to fostering sustainability across various industries.
3. Potential for Value Appreciation: The convergence of societal trends towards sustainability, coupled with TEAF’s strategic focus, positions the fund favorably for potential value appreciation over its term, further enhancing its appeal as a long-term investment option.

Navigating the Discount Conundrum

TEAF’s discounted valuation, exacerbated by its unconventional portfolio composition, underscores the enduring challenge of closed-end fund discounts. However, for savvy investors willing to look beyond short-term fluctuations, TEAF presents an opportunity to harness the power of patient investing and capitalize on the fund’s unique characteristics.

Expense Breakdown

• Management Fees: 1.50%
• Other Expenses: 0.28%
• Interest Expenses: 0.50%

Total Expenses: 2.28%

For those interested in delving deeper into TEAF, comprehensive information is available at the Ecofin provider site.

ClearBridge MLP and Midstream Fund

• Overview
  • Market Value: $575.8 million
  • Distribution Rate: 7.1%
  • Discount to NAV: -8.6%
  • Expenses: 7.58%*

In the realm of energy investments, the ClearBridge MLP and Midstream Fund (CEM) emerges as a compelling opportunity for investors seeking exposure to the midstream oil and gas pipeline sector. Despite recent challenges within the energy landscape, CEM presents a promising avenue for capitalizing on potential tailwinds and undervalued assets.

Why Consider CEM?

1. Strategic Portfolio Allocation: CEM strategically invests in a diversified portfolio of midstream oil and gas pipeline stocks, positioning itself to benefit from potential industry rebounds and ongoing geopolitical factors impacting energy markets.
2. Discounted Valuation: Trading at a significant discount to its Net Asset Value (NAV), CEM offers investors an attractive entry point into the energy infrastructure sector. This discounted valuation not only enhances the fund’s appeal but also presents an opportunity for value appreciation as market sentiment improves.
3. Generous Distribution Rate: With a distribution rate of 7.1%, CEM provides investors with a steady income stream, bolstering its allure as a long-term investment option.

Navigating Volatility

While CEM may exhibit volatility inherent to the energy sector, its strategic positioning and discounted valuation mitigate some of the associated risks. Investors can capitalize on the fund’s potential for capital appreciation while enjoying a robust distribution yield, thereby offsetting short-term fluctuations.

Expense Analysis

• Management Fees: 1.47%
• Additional Expenses: 3.51%
• Interest Expenses: 2.60%

Total Expenses: 7.58%

Despite the expenses associated with CEM, the fund’s unique positioning and potential for value appreciation make it a compelling option for investors seeking exposure to the energy sector.

For those interested in further exploration, detailed information is available at the ClearBridge provider site.

ClearBridge Energy Midstream Opportunity Fund

• Overview
  • Market Value: $490.5 million
  • Distribution Rate: 7.0%
  • Discount to NAV: -8.6%
  • Expenses: 4.75%*

In the landscape of energy investments, the ClearBridge Energy Midstream Opportunity Fund (EMO) emerges as a compelling option for investors seeking exposure to the oil and gas pipeline sector. Similar to its counterpart, CEM, EMO offers investors an opportunity to capitalize on the potential of midstream assets while avoiding the complexities associated with direct ownership of master limited partnerships (MLPs).

Why Choose EMO?

1. Streamlined Access to MLPs: EMO provides investors with access to a portfolio of oil and gas pipeline stocks, predominantly comprised of MLPs. By investing in EMO, investors can circumvent the complexities of MLP ownership, including tax complications and restrictions on holding them in certain retirement accounts.
2. Diverse Holdings: EMO boasts a diversified portfolio, with key holdings in prominent pipeline firms such as Energy Transfer (ET), Enterprise Products Partners (EPD), and MPLX (MPLX). This diversification mitigates individual stock risk while positioning the fund to benefit from sector-wide growth.
3. Discounted Valuation and Competitive Yield: Trading at an 8.6% discount to NAV and offering a competitive distribution rate of 7.0%, EMO presents an attractive investment opportunity for income-seeking investors seeking exposure to the energy infrastructure sector.

Navigating Tax and Complexity

Unlike direct ownership of MLPs, which can entail complex tax reporting and restrictions on certain retirement accounts, investing in EMO streamlines the investment process, allowing investors to enjoy the benefits of MLP exposure without the associated hassles.

Expense Breakdown

• Management Fees: 1.47%
• Additional Expenses: 0.60%
• Interest Expenses: 2.68%

Total Expenses: 4.75%

Despite expenses, EMO’s discounted valuation and strategic positioning make it a compelling option for investors seeking exposure to the energy midstream sector.

For those interested in delving deeper, detailed information is available at the ClearBridge provider site.

Sprott Physical Gold Trust

• Overview
  • Market Value: $6.7 billion
  • Distribution Rate: N/A
  • Discount to NAV: -1.5%
  • Expenses: 0.41%*

In the realm of precious metals investing, the Sprott Physical Gold Trust (PHYS) offers investors a straightforward avenue for exposure to gold bullion. Unlike traditional closed-end funds, PHYS does not pay distributions nor actively manage its portfolio. Instead, it serves as a passive custodian of physical gold, providing investors with a direct means of participating in the potential appreciation of the precious metal.

Why Consider PHYS?

1. Direct Gold Exposure: PHYS holds a passive portfolio consisting solely of physical gold bullion. This direct exposure to gold allows investors to capitalize on potential price appreciation without the complexities associated with futures contracts or mining stocks.
2. Discounted Valuation: Despite its passive nature, PHYS often trades at a discount to its Net Asset Value (NAV). Presently, the fund offers investors an opportunity to acquire gold at a modest discount of 1.5%, enhancing its appeal as a cost-effective means of gaining exposure to the precious metal.
3. Diversification Benefits: Gold has historically served as a hedge against inflation and geopolitical uncertainties, making it a valuable addition to diversified investment portfolios. PHYS enables investors to access these diversification benefits without the need for storage or security concerns associated with physical gold ownership.

Navigating the Gold Landscape

As global central banks consider interest rate cuts, the outlook for gold remains favorable, with the potential for further price appreciation. PHYS provides investors with a convenient vehicle for capitalizing on these trends, offering a simple and transparent approach to gold investing.

Expense Breakdown

• Management Fees: 0.35%
• Other Expenses: 0.06%

Total Expenses: 0.41%

Despite its passive nature, PHYS’s low expenses and discounted valuation make it an attractive option for investors seeking direct exposure to gold bullion.

For those interested in further exploration, detailed information is available at the Sprott provider site.

Eaton Vance Tax-Advantaged Global Dividend Income Fund

• Overview
  • Market Value: $14 billion
  • Distribution Rate: 6.7%
  • Discount to NAV: -12.2%
  • Expenses: 2.70%*

For investors seeking a diversified approach to global dividend income, the Eaton Vance Tax-Advantaged Global Dividend Income Fund (ETG) presents an attractive opportunity. With its focus on dividend-paying value stocks across international markets, ETG offers investors exposure to a wide range of sectors and geographies, while also providing tax-advantaged benefits.

Why Choose ETG?

1. Global Diversification: ETG’s investment strategy encompasses a broad universe of dividend-paying value stocks, with a focus on both U.S. and international markets. By maintaining exposure to various regions, including Europe and emerging markets like Taiwan and India, ETG ensures diversification and potential for growth.
2. Discounted Valuation and Competitive Yield: Trading at a significant discount of 12.2% to its Net Asset Value (NAV), ETG offers investors an opportunity to acquire its holdings at a reduced price. Additionally, with a distribution rate of 6.7%, ETG provides a competitive yield for income-seeking investors.
3. Flexible Portfolio Allocation: While the majority of ETG’s portfolio is invested in common stocks, the fund also holds positions in preferred stock and bonds, offering investors a diversified blend of income-generating assets. This flexibility allows ETG to adapt to changing market conditions while pursuing its income objectives.

Navigating Market Dynamics

Despite fluctuations in market sentiment, ETG’s discounted valuation remains an attractive proposition for investors seeking to capitalize on its global dividend income strategy. The fund’s ability to maintain exposure to both U.S. and international markets further enhances its appeal as a comprehensive investment solution.

Expense Breakdown

• Management Fees: 0.85%
• Other Expenses: 0.33%
• Interest Expenses: 1.52%

Total Expenses: 2.70%

While expenses are a consideration, ETG’s discounted valuation and diversified approach make it a compelling option for investors seeking global dividend income.

For those interested in further exploration, detailed information is available at the Eaton Vance provider site.

BlackRock Municipal 2030 Target Term Trust

• Overview
  • Market Value: $1.5 billion
  • Distribution Rate: 2.7%
  • Discount to NAV: -12.8%
  • Expenses: 1.68%*

For investors seeking a tax-efficient income stream with defined term exposure, the BlackRock Municipal 2030 Target Term Trust (BTT) offers a compelling opportunity. As a municipal closed-end fund (CEF) with a target liquidation date in 2030, BTT aims to provide investors with a combination of tax-free income and potential capital appreciation as it approaches its termination.

Why Choose BTT?

1. Targeted Term Structure: BTT is structured as a term fund with a planned liquidation in 2030, aiming to achieve a net asset value (NAV) of $25 per share at the end of its term. This defined term structure provides investors with clarity regarding the fund’s investment horizon and potential return profile.
2. Discounted Valuation: Trading at a substantial discount of 12.8% to its NAV, BTT presents an opportunity for investors to acquire municipal bonds at a reduced price. This discounted valuation enhances the fund’s yield potential and provides a cushion for potential capital gains as the fund’s share price converges with NAV at liquidation.
3. Tax-Efficient Income: Municipal bonds held within BTT offer tax-free income, making the fund an attractive option for investors seeking to optimize their tax efficiency. With a current distribution rate of 2.7%, BTT provides a competitive tax-exempt yield, further enhancing its appeal for income-oriented investors.

Navigating Risk and Return

While BTT utilizes leverage to potentially enhance returns, investors should be mindful of the associated risks, particularly during periods of market volatility. However, the fund’s focus on municipal bonds with maturities aligned with its termination date helps mitigate interest rate risk, providing a more stable income stream over its term.

Expense Breakdown

• Management Fees: 0.40%
• Other Expenses: 0.03%
• Interest Expenses: 1.24%

Total Expenses: 1.68%

Despite expenses, BTT’s discounted valuation, tax-exempt income, and defined term structure make it a compelling option for investors seeking tax-efficient income and potential capital appreciation.

For those interested in further exploration, detailed information is available at the BlackRock provider site.