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Politics : Ask Michael Burke
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To: Terry Maloney who wrote (84511)10/23/2000 1:28:06 AM
From: Michael Bakunin  Read Replies (1) of 132070
 
In order to hold securities with an often-fat fee attached, the market demands an offsetting discount. Income funds have lower discounts. Income gets paid at NAV, which bonus somewhat offsets the management fee.

Overlay greed and fear, and something of a premium for hard-to-invest sectors or countries, and you've gone a long way to making sense of CEF's discounts.

The real question, IMO, is why anyone buys into them at NAV in the first place.

-mb
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