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Closed-End Funds (CEFs) average an 8% yield, significantly higher than the 1.1% yield from the SPDR S&P 500 ETF Trust (SPY). Two notable CEFs, the BlackRock Science and Technology Trust (BST) and the Columbia Seligman Premium Technology Growth Fund (STK), charge management fees of approximately 1.1% and have consistently outperformed SPY since their inception.
Both BST and STK currently trade at discounts to their net asset values (NAV) of 8.9% and 6.2%, respectively. Despite common misconceptions about higher fees diminishing yields, the fees for CEFs are taken from the fund’s portfolio before dividends are distributed, meaning investors receive the full advertised yield.
Investors are encouraged to consider the potential of CEFs as a reliable income source, particularly in volatile markets, where high dividends can provide substantial financial relief.
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