Upcoming Closed-End Fund Offerings Give Cause For Excitement

It continues to be a relatively slow year for CEF IPOs, with only two new funds launching in September, the Morgan Stanley China A Share Fund (CAF) and the BlackRock Real Asset Equity Trust (BCF). I haven't read through the prospectuses for either of these funds, but I will take a closer look at them if they eventually trade at a decently sized discount.

I did recently do a search for other CEFs that have filed registration statements, and I came across two funds that looked really interesting to me.

The first one is the DWS Dreman Value IncomEdge Fund. The main reason this fund drew my attention is that I really like Dreman Value Management, and would be interested in any fund that they advise. Also, this fund will use a hedge strategy in an attempt to generate returns that are uncorrelated to the S&P 500, which is unique for a closed-end fund.

The other fund I noticed is the Cohen & Steers Closed-End Opportunity Fund. As far as I know, this would be the first CEF that invests primarily in other closed-end funds. This is a good strategy, but investors may question why they should pay the management fee to invest in this fund instead of just investing in the underlying funds directly. It could be a good choice for investors who don't want to pay the commissions involved in buying several different CEFs though. Plus, if it trades at a discount, this C&S fund could be a good opportunity for someone to buy a group of discounted CEFs at an additional discount.

I don't know if either of these funds will be launched this year, but it is good to see that closed-end fund managers are still looking for innovative strategies even though the CEF IPO market has cooled.

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