investing

5 alternative asset classes to consider

Investing » 5 Alternative Asset Classes To Consider

Income investor: Closed-end funds
Income investor: Closed-end funds © AshDesign/Shutterstock.com

If you're looking for income but don't want to go too far afield, take a look at closed-end funds. They aren't alternative investments, but they do have a structure different from their popular brethren -- open-end mutual funds. And they employ some techniques that can amplify returns (or losses).

Like ETFs, closed-end funds trade on an exchange. Unlike open-end mutual funds, redemptions are not done through the mutual fund company once a day. Instead, shares are traded in the market throughout the day. As a result, the market determines the value of the fund, so closed-end funds often trade at a premium or a discount, or above or below the actual value of the underlying investments.

Not all closed-end funds invest in fixed-income securities, but most of them do, says Morningstar's closed-end analyst Cara Esser.

"The majority of the universe is fixed income and the majority of that universe is municipal bonds. And then within fixed income there are a lot of different strategies that they can use: bank-loan funds, preferred share funds, high-yield emerging markets, precious metals and gold funds," Esser says.

Most closed-end funds, even on the equity side, focus on income generation, and a majority of them use leverage to increase it.

advertisement

          Connect with us
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

Need to invest $3K for the long term?

Dear Dr. Don, What's the best place to invest $3,000 for the long term? I'm interested in earning the best rates with low or no fees. Thanks, -- Cheryl Compounds Dear Cheryl, You've got (at least) three questions to... Read more

advertisement

Blog

Sheyna Steiner

Is your broker wrecking your retirement?

Skewed financial incentives for advisers can lead to less than optimal financial advice. What is the answer to conflicts of interest?  ... Read more

Partner Center
advertisement

Connect with us