Long term readers know I am a big fan of buying closed-end funds at discounts and selling them at parity. Closed-end funds are one of the least efficient areas of the market, and many can and do trade at very large discounts to their NAV. ETFconnect.com is a good resource here.
It was with great interest when a reader brought it to my attention that there is an ETN that invests in closed-end funds trading at a discount.
Fact Sheet for the underlying index here.
Ticker Symbol is GCE.
The average discount of the top 5 holdings is around -10%.
Cohen and Steers also has a closed-end FOF but it trades as a closed-end fund and can also trade at a discount (in effect getting a double dip). It got as low as about a -8% discount but is back to parity. Quant Investor had a nice article here.
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With the Dogs of the Dow on their way to their worst year ever, I wonder if it is a good time to put some money into the closed end fund that track the Dogs strategy (DSF) as it is trading at a -4% discount?
While we’re on the topic of dividends, why do you think Siegel uses them in his Wisdom Tree funds? From his very good book “Stocks for the Long Run”:
“But from a tax standpoint, share repurchases are superior to dividends.”
