Best 10 Closed End Funds for Income in 2021
As an investor, you obviously have a portfolio, and you need to see it grow to feet different investment markets. A closed-end fund is one of the ways you can invest in widening the exposure of your portfolio for the realization of more dividends and value for your investments.
The closed-end funds are professionally managed by an expert professional who on your behalf oversees your portfolio and participates in active buying and selling of the holding shares.
What are Closed End Funds?
The concept behind the closed-end funds is easy to understand and invest in. The closed-end funds are termed as a portfolio of pooled assets that raise a fixed capital from an initial public offering before listing the shares for trade on the stock exchange.
You will also realize that the closed-end funds are invested in a portfolio of securities and managed by experts from an investment firm.
Are Closed-End Funds a Good Investment?
Yes, like any other investment, the closed-end funds also have some setbacks, like subject to volatility but also hold a wide range of advantages that you can enjoy as an investor.
We can recommend closed-end funds because they come with a wide range of benefits, including exposing you to a diversified portfolio, transparent pricing offers you higher yields as compared to the open-ends funds, and they are managed by a team of professionals that makes sure that your investment is secured.
Top 10 Closed-End Funds (CEFs) Income for 2021
Here are the best 10 closed end funds that you can consider for investment in 2021;
1. The Indian Closed End Fund
2. Voya Emerging Markets High Dividend Equity Fund
3. BlackRock Taxable Municipal Bond Trust
4. Aberdeen Total Dynamic Dividend Fund
5. PIMCO High Income Fund
6. Hercules Capital
7. BlackRock Core Bond Trust
8. Neuberger Berman High Yield Strategies Fund
9. AllianceBernstein Global High Income Fund
10. BlackRock Science and Technology Trust II
1) The Indian Closed End Fund
If you are an investor and you bullish on the future of the Indian economy, then the Indian Closed-End Fund is the best closed-end fund you might consider investing in. This fund invests in shares of major Indian companies, which serves it with long-term capital appreciation.
Since this fund focuses on India and India’s economy is one of the fast-growing economies, you can trust it for our investment. However, the Indian Closed-End Fund exposes you to an expense ratio of 1.35%.
2) Voya Emerging Markets High Dividend Equity Fund
Voya Emerging Markets High Dividend Equity Fund aims to invest in emerging markets dividend-producing securities. To further boost its income, this fund sells call options and makes extra income. The value of the call represents about 15-50% of Voya Emerging Markets High Dividend Equity Fund’s total value.
You can trust Voya Emerging Markets High Dividend Equity Fund and invest in it as the emerging market stocks are close to their value, which assures you a good dividend yield. Although this fund invests in emerging markets, it also has investments in bigger market names like the Alibaba Group, Tencent Holdings, Samsung Electronics, and even Taiwan Semiconductor Manufacturing.
If you are interested in the financials and information technology sectors, the Voya Emerging Markets High Dividend Equity Fund has your interest. It has about 21-30% in these sectors. To invest in this fund, you only need an expense ratio of 1.39%.
3) BlackRock Taxable Municipal Bond Trust
BlackRock Taxable Municipal Bond Trust first seeks high current income, then later focuses on capital appreciation. This fund was issued with the aim of recessing to help the local governments to fund their infrastructures.
BlackRock Taxable Municipal Bond Trust is safer than the municipal bond since their interests on the bond are subsidized by the federal government.
This fund has also invested up to 20% in the U.S. Treasury and bonds that are issued by hospitals and private universities. This has made it to maintain its top performance for the last decade. Even with these promising returns, BlackRock Taxable Municipal Bond Trust requires you to incur an expense ratio of 0.88%.
4) Aberdeen Total Dynamic Dividend Fund
The yields in the current market are not easy to come in the current market, but Aberdeen Total Dynamic Dividend Fund comes in to fill such a gap. It seeks companies with high current dividend and those with the secondary growth of capital.
Aberdeen Total Dynamic Dividend Fund also focuses on the world markets, including the strong dividend payers and the companies with potential for dividend growth. Its main holdings include; Microsoft, Williams companies, Apple, Barrick Gold, and even the Intel firm.
Even with high yield potential, Aberdeen Total Dynamic Dividend Fund only requires an expense ratio of 1.18%.
5) PIMCO High Income Fund
PIMCO High Income Fund requires you to incur an expense ratio of 0.91% excluding the interest expense but promises you high yields.
PIMCO High Income Fund ranks as the best-closed end fund you can invest in in 2021. It makes use of a dynamic asset-allocation strategy to make a decision on the fixed income securities from different sectors. It focuses on capital appreciation as a secondary objective.
PIMCO High Income Fund is further permitted to invest in securities that fall below the investment-grade or junk of bonds. It also taps its global income markets that have 255 of its total assets.
If you are interested in a diversified market across industries like financials, aerospace, military real estate investment trusts, then PIMCO High Income Fund has your interests.
6) Hercules Capital
Hercules Capital is more of a business development company than a fund. It aims at providing financial assistance in the form of debt to high-growth venture capital-backed companies in a wide variety of industries.
Hercules Capital has funded a good number of firms, including Gazelle, Facebook, Docusign, and Everyday Health, with promising payback. Hercules Capital also holds a market cap of more than $1.47 billion.
You can always trust your investment in Hercules Capital as it is internally managed. This means that it won’t change its management fees over time.
7) BlackRock Core Bond Trust
If you are a conservative investor, you will appreciate any closed-end funds populated with U.S. treasury, high-yield and foreign bond, and investment-grade corporate debt; and this is what you get when you invest in BlackRock Core Bond Trust.
BlackRock Core Bond Trust includes Verizon communications, the Federal National Mortgage Association, JPMorgan Chase, and the Bank of America. It has a solid performance over the years now; hence you can trust in it. You only require an investment ration of 1.42% to invest in BlackRock Core Bond Trust.
8) Neuberger Berman High Yield Strategies Fund
Neuberger Berman High Yield Strategies Fund aims at investing in below-investment-grade debt with the aim of maintaining its stay on the high-quality end of the junk-bond spectrum.
Its portfolio is always set primarily at a low investment duration time, with over two-thirds of its investment on lastly for about four years while around 17% of its assets invested in bonds with a duration of less than a year.
In case you are interested in short-term investment, then Neuberger Berman High Yield Strategies Fund can be a better choice for you, but you have to incur a 1.96% baseline investment and a 1.45% interest expense that amounts to an expense ratio of 3.41%.
9) AllianceBernstein Global High Income Fund
The best-closed end fund to spread your investment geographically in a fixed-income portfolio is AllianceBernstein Global High Income Fund. It has the mandate to bring together globally diversified portfolios and pursue high-income opportunities across all income fixed sectors.
AllianceBernstein Global High Income Fund requires you to set aside an expense ratio of 1.04% spread on both 0.99% baseline expense and 0.05% on interest expense.
10) BlackRock Science and Technology Trust II
This is one of the latest closed-end funds that went live in 2019 but has managed to raise a premium of over 8% that is above the expectation of many starting closed-end funds.
Many investors are in a rush to invest in BlackRock Science and Technology Trust II because of its relationship with the BlackRock Science and Technology Trust that has higher returns of over 178% for the past five years.
BlackRock Science and Technology Trust II give you a reason to invest in it as it has a market value of $1.5 billion with a distribution rate of 5.7%. You will only be required to incur an expense ratio of 1.32%.
As an investor, you need to widen your investment portfolio, and the above-closed end funds give you an opportunity on the same. They come with a distribution rate rather than a dividend rate that assures your earnings, the return of principal, and even the capital gains.