PowerShares CEF Income Composite ETF
Average Discount to NAV: 7.35%
Distribution Yield: 8.3%
The PowerShares CEF Income Composite ETF (PCEF) tracks 149 different CEFs in the taxable bond categories as well as CEFs utilizing an equity option writing strategy. That includes all the funds on this list, minus NUV. Basically, the ETF allows you to buy the bulk of the CEF universe with one ticker.
Part of PCEF’s screen process is focus on funds that trading for discounts to the NAVs. With that in mind, PCEFs underlying portfolio of funds is currently trading at an average discount to NAV of 7.35%. Meanwhile, PCEF kicks out a monster 8.3% monthly dividend.
The downside to PCEF is that it isn’t cheap. Expenses for the ETF run 1.73%. Plus as a fund of funds, you’re technically paying expenses for all the underlying CEFs it owns. That makes it one of the most expensive ETFs to add to a portfolio.
However, given the sheer number of CEFs and bargains it holds, investors may want to give PCEF a go.
Disclosure: Aaron Levitt may initiate a position in any one of the CEFs mentioned in this article within 72 hours.