By Investing.com
Publication Date: 2025-12-01 07:00:00
When it comes to our favorite income investments—8%+ yielding closed-end funds (CEFs)—there are a lot of misconceptions out there.
It’s critical that we put those right, because they’re causing some investors to miss out on CEFs, and the big (and often monthly) dividends they provide. And I know I don’t have to tell you that in turbulent times like these, high payouts like those are a lifesaver.
Two of the biggest misunderstandings surrounding these funds are:
- CEFs have higher expense ratios than passive funds, and …
- You’re better off to buy stocks, such as Microsoft (NASDAQ:), direct, on the open market, than through CEFs.
Let’s address both of these concerns because they could lead you to avoid CEFs and invest in ETFs, like the popular S&P 500 index fund, the SPDR S&P 500 ETF Trust (NYSE:). Unfortunately, doing so can cost you significant dividends: CEFs yield around 8% on average, while SPY, the largest ETF by market cap, yields a paltry 1.1%.
So, let’s dig into…
