Okay, we're gonna talk about closing funds. real briefly. Basically as we mentioned it's closing funds are similar to ETFs or mutual funds where they put a basket of stocks together there's a manager they price themselves on the stock market. And interesting enough once the closed end fund has been on the market for a while they pricey nav or net asset value. Whatever the stocks are worth usually those dropped down in value. So if you give it time he's you can get a close infant at a discount.

Discounts can range from 510 15 or even 20%. Compared to what the stocks are worth inside that fun. The trick though closing the fund is purchasing it when it's at a discount, hanging on to it clicked into dividends clicked in the payout. reinvesting it and eventually, if the fun becomes popular, it will trade at a premium allowing you to cash out at a profit. Or they will actually bring the clothes in front to market and make it an open and fun or regular mutual fund. For the nav net asset value goes back up to where it should be resulting in profit because you bought at a discount.

Now a couple interesting sides of it RLC that's the return of capital. Closing funds a lot of times will return your investment dollar t U. If this isn't a taxable account, a lot of times this will be treated as a non taxable return of capital which helps keep your taxes down. The downside is if there's too much return of capital, the closed end fund literally could be eating itself alive, trying to pay out dividends to you monthly or quarterly or you Nearly reducing the value of the fun by cannibalizing inside the fun. The other thing to be aware of is high fees, it's not unusual to have a one or 2% maintenance fee to run the Fund, which over time can be quite high net has to be over basically overwhelmed by your performance and the closed end fund to justify a high fee. The last thing you want to look as leverage.

A lot of times with the amount of money that comes back to you from a closed end fund is because they use leverage Seville Muse options, puts in calls. Others will use margin that help justify in pain and come back to you over time. So you might be careful leverage. Usually leverage one to two percents all right when you get above that Front can get in trouble trying to maintain a high payout to you. So close and funds are interesting, I will take a look at them as another alternative means to use your excessive profits in the market. The one thing close in front has going if you put a fixed amount in there, it's almost like an annuity, it's going to pay out a certain percentage over time.

As it depletes itself you can actually keep track of that. And know when the payments are going to come to an end. Hopefully the income stream from a closed end fund would more than pay for the fund itself of the original money you put in. The other thing I would be cautious with closing the funds is yours want to buy one it's been on the market for a long time. So you can get a mixture as a good size discount. If it has a history of becoming a premium or actually going open ended.

That can also give you nice profits. Be wary of return of capital because you're getting your some of your capital back. Even though it's non taxable, that can hurt performance. Be wary of high fees because you're paying for somebody else to run the fun. Leverage is another important point. And the other point is closing funds even though they have prospectus usually their financial information is quite limited in terms of what they tell you that they own.

The nice thing about closing funds you cannot get access to certain stocks. That for the average investor be pretty high to buy into example would be Berkshire Hathaway which would cost you thousands of dollars per share, to get in Amazon Google that kind of stuff. Where you can get it instant act access you say at a discount. I purchased seen a close in fun. Yeah, think about closing funds and foreign markets. For example, in Asia, some of the closed end funds actually went up in value.

One, the sector itself went down because of currency exchange and that kind of thing. It's funny because people want to get in to a certain country and their only access, maybe a closing Fund, which would drive up the value because everybody wants in into an area that actually has been pretty much beaten up and is available at a discount. So closing funds are also useful in that regard. of good place like a closed end funds is that CF Connect. And we'll take a peek over there. This is it right here.

And here, you can actually use a screener to see what type of distribution or dividend rate you're looking at how frequent and what is the discount or the premium Regardless, there was the buy at a discount, you don't want to buy a premium. For example, this close in front here and CV was trading at a 5.9% Premium over cost. You're paying for the luxury to get in almost like a loaded fun. Or you have here and I E, at a discount of negative 8.45% payout, a 6.95% dividend or distribution rate, quarterly. And here you can actually look at the individual close in funds and do a little shopping and see which ones get to you. I usually like to get at something at 10% or better discounted.

I want to see what's inside the front and I want to see if the front ever goes above the nav which this would turn into a premium and then ready to make a profit, that type of thing. So that's Pretty much the story of unclosed