Several studies have shown that closed-end funds tend to trade at a discount (sometimes exceeding 50%) to their per share NAVs.
Theoretically, investors could purchase all the shares in the fund, liquidate the fund, and make a profit by selling the constituent securities at their market prices.
However, after accounting for management fees, unrealized capital gain taxes, liquidity and transactions costs, any profit potential is eliminated.
Theoretically, investors could purchase all the shares in the fund, liquidate the fund, and make a profit by selling the constituent securities at their market prices.
However, after accounting for management fees, unrealized capital gain taxes, liquidity and transactions costs, any profit potential is eliminated.
No comments:
Post a Comment