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Closed-End Bond Funds

Investing in closed-end funds is an excellent method to add yield to a portfolio while gaining diversity in a particular sector. We will look to add closed-end funds when they are trading at a reasonable discount to Net Asset Value (NAV), yields are attractive and our view on the asset class is bullish or stable. Closed-end funds usually employ a small amount of leverage; therefore, during volatile periods their price movements can be exaggerated. These types of movements generally represent excellent buying opportunities as most of these moves are usually retracted. Therefore, the benefit to closed-end funds is two-fold: capital appreciation and dividend income.