Advantages of Using Closed End Fund Screener
What is a closed end fund and what advantages will a screener for this type of fund offer? This type of fund is frequently called a CEF, and it is an investment company which is publicly traded on the markets. With most mutual fund types shares are issued and redeemed but CEFs do not follow this method. These funds are treated like individual companies instead and are traded more like common stock offerings on the market. These funds use the national security exchanges for listing and they offer many advantages. A screener that identifies funds which are closed end can allow investors to enjoy all of the advantages that this type of fund can offer. Without a screener tool finding this type of fund may be much more difficult and time consuming.
A closed end fund screener will identify CEFs and provide the advantage of liquidity in trading. This type of fund also offers the advantages of flexibility and instant diversification. Small investment amounts used to purchase stocks may only buy a few shares and result in a portfolio that is not well diversified. A CEF can provide a wide range of diversification and numerous holdings with the same small initial investment amount. Professional portfolio management is another benefit that almost any type of mutual fund will offer. Using a fund screener to identify CEFs can significantly reduce the amount of time and effort spent finding possible investment choices. The tool can locate many funds of this type in a very short time. Identifying each fund individually could takes days or weeks.
Screeners used to find closed end fund investment choices will list funds that typically have lower than average operating expenses where mutual funds are concerned. This type of fund does not have a high turnover or excessive marketing fees so the investing costs for the fund are usually much lower than open end funds. In addition there are not any minimum investment amounts in place and a small initial amount of capital is needed to invest in these types of funds. Screener software designed to identify funds that are close end will benefit investors who are looking for these funds and will detail important elements and information about each specific fund available.
The close end fund screener should never be used to replace thorough research and fund comparisons. This software can be helpful and has a number of advantages but it is still only one of many tools that should be used when evaluating investment choices. These funds often have the benefit of leverage as well as many other advantages. After the screener has located funds of this type each one should be closely researched to determine which ones fit the investment criteria in place. Any funds that do not fit with the risk levels set by the investor should be discarded immediately. The distributions offered, past performance, fund holdings, and other factors need to be looked at to find the right fund type for this type of fund and the specific investor.
To find what CEFs are hot right now read an article about Top 10 Closed End Funds on this website.