Experts Recommend Overlay Strategy For CEFs
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Friday, June 21, 2013

Experts Recommend Overlay Strategy For CEFs

CEFs can be good investments if added at the right moment, said Morningstar's Steven Pikelny. Panelists at the Morningstar Investment Conference sung the virtues of using a CEF overlay strategy in ETF and mutual fund portfolios. One of the potential downfalls of investing in CEFs is that sudden changes in investor sentiment can cause share prices to fall faster than the fund's NAV.

An overlay is a blessing when investor sentiment forces prices to fall because CEFs can swap current holdings for similar holdings and swap back into the original vehicle when CEF discounts contract, Pikelny explained.

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