The market rally that started in early November last year has continued into the new year. The market rise has been very impressive, in spite of many negative sentiments like the winter spread of COVID-19, the discovery of new strains of coronavirus, slower than expected deployment of coronavirus vaccines, and the fresh bout of rising unemployment. But the additional stimulus and hopes of even more stimulus have helped move the market forward. That said, the volatility has increased significantly in the past month or so, and that's a cause for concern. There are many investors who are fully convinced that we are in bubble territory, and a big correction is all but certain, and that may be true. But we all know that bubbles can continue to get inflated for longer than many think. We just have to look at the period from 1995-2000. So, it's pointless to figure out where the market will be in three months or six months down the line. It's best to keep the focus on your long-term goals and strategies that have proven to work in good times and bad.
The income-centric funds like CEFs, which had generally lagged the market during the summer recovery last year, have now joined the broader rally and making decent gains this year. The downside is that if you are a buyer, the discounts and yields have come down.
All that said, the future always is hazy, even in the best of times. So, it's always prudent to ignore the short-term gyrations of the market and focus on the long term. In that spirit, we keep looking for good investment opportunities and keep our wish list ready and buy when the time is right.
Why Invest in CEFs?
For income-focused investors, closed-end funds remain an attractive investment class that
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