![]() ![]() ![]() This research conclusion forms the core basis of our investment strategies within MDCEX and MDFIX. ![]() Further, our research shows that more heavily discounted closed-end funds tend to have better subsequent performance than less discounted closed-end funds or those that trade at a premium. Our research indicates that the relationship between price and NAV is highly correlated to a closed-end fund’s subsequent total return. When a closed-end fund is trading at a price that is less (more) than its NAV, it’s said to be trading at a discount (premium). A closed-end fund can trade at a price that is different from its stated NAV. Our research indicates that the single most influential factor on future total returns for closed-end funds is a fund’s discount or premium to its net asset value (NAV). When we evaluate closed-end funds for potential investment within MDCEX and MDFIX, we do not consider expense ratios to be important. While it’s hard to believe, expense ratios have virtually no influence on the future returns of individual closed-end funds. We have studied, modeled, and tested the closed-end fund market extensively to determine what factors are statistically significant in predicting future total returns for individual closed-end funds ( see U of O Study). So why is it different for closed-end funds? For open-end mutual funds and ETFs, we believe expense ratios are extremely important in fund selection and are significant predictors of future total return. This research conclusion is counterintuitive and goes against most conventional investing wisdom. Contrary to what most investors assume, our proprietary research indicates that expense ratios are not statistically significant predictors of future total return for closed-end funds. ![]()
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