Chamois16

Index ETFs Have the Edge Over Actively Managed CEFs

Not a very persuasive argument. CEF pay out higher distributions, particularly country funds, and its not clear that that the comparisons are based on total returns. Finally comparisons can be made either on NAV basis or market price basis. You can't compare a CEF market price with an Index ETF NAV.

One of the advantages of CEF is the ability to exploit periodic excursions from equilibrium discounts common to each fund. That doesn't ccur with ETF subject to creation unit arbitrage, usually penalizing the ETF holder in favor of the arb. There are times in a market cycle in which index ETF outperform CEF and vice versa.

The article seems to be comparing an investment vehicle which is at best nascent (how many truly actively managed ETF are out there). with CEF which have been around for a long time and are particularly suited to sspecific asset classes.

You would do better to limit your comparison to index ETF vs actively managed ETF when sufficient data becomes available, and not try to deal with the vaery different attributes of CEF

US Investors Not Feeling the Chinese Stock Market Sizzle

Using YTD data for closed end funds can be quite misleading if CEF dynamics are not understood. These CEF paid out large cap gains distribution at yearend, causing the NAV to drop precipitously and putting the market prices ata momentary high premium. These conditions qickly corrected in the new yearand and market prices in January, reflecting the distribution went to more noraml discounts, Since that time, the performance ofmarket prices and NAV have more closely followed the indexes they represent.

More fundamentally, there is a major performance distinction between A&B share mainland markets and HK. CAF, as the example, marches to a different drummer than the other China CEF, even if that drummer may potentially be out of control.

As long as these PRC markets are growing rapidly, I think it is wrong to discount the utility of ETF and CEF as vehicles, CEF, for example, must recognize harvested capital gains through distribution, reducing future market risk associated with ownership.