The Liberty All-Star Equity Fund (USA) is currently yielding 10.4% and has provided an annualized return of 11.7% over the past decade. This fund’s dividend payouts have increased by 25% in the same period, benefiting from a 12.5% discount to its net asset value (NAV), a significant deviation from its five-year average discount of 0.9%.
In contrast, the Pershing Square USA (PSUS), launched by investor Bill Ackman in April, has struggled, posting a 24% decline since its inception. Despite raising $5 billion, it has underperformed the S&P 500, showing a negative NAV return of about 2.5% and currently trading at a 22.7% discount. This setback may stem from its large size relative to its market performance and lack of dividend payouts.
Investors considering CEFs should be aware that, on average, these funds deliver an 8.7% yield, far superior to typical S&P 500 index funds that yield around 1%. High-yielding CEFs can significantly reduce the amount of capital needed to generate substantial income, exemplifying their appeal for income-focused investors.
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