Discounts Beckon in Closed-End Funds

In the New York Times, August 31, 2008, Benjamin Tobias was quoted in the article Discounts Beckon in Closed-End Funds by Conrad De Aenlle.  Closed-end funds often trade at a premium or discount due to the fact that there are a fixed amount of shares on the market.  Some advisors are attracted by this but Ben is unenthusiastic.  “Managers of closed-end funds are receiving their fees day in and day out, regardless of the value of the funds,” he said.  “If an open-end fund does poorly, you can sell it and the assets fall.  If a closed-end fund does poorly, it still has all of those assets; all you can do is sell to somebody else.  I want to align compensation with performance.”

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