Are Closed-End Income Fund Bargains Too Good to Be True?
Yet, when it comes to closed-end income funds, the bargains aren’t too good to be true. They’re a result of fearful investors. Not a breakdown in the underlying fundamentals. You see, when investors are scared, they sell indiscriminately. Companies with stellar earning growth and fundamentals get tossed just as quickly as companies with terrible fundamentals. If you have any doubt, consider that as of the close on October 6, 80% of the stocks in the Russell 3000 were down for the year. Obviously, not every one of those 2,400 stocks sports terrible fundamentals. My point. Good stocks are getting thrown out with the bad. So, too, are many solid closed-end income funds. It’s especially true among the 400 or so income-based closed-end funds. Because investors are extremely leery of anything credit related, they’re selling income funds more aggressively. For investors that value solid income (in some cases paid monthly), with the potential for double-digit appreciation, too, I’m convinced n
