Confessions Of A Closed-End Fund Bargain Hunter
- 4 months ago
Classical economics: All actors are rational and stocks are efficiently priced. Behavioral economics, per Nobelist Richard Thaler: Investors’ decisions are warped by emotion and ignorance and prices can get out of line.
Count Erik M. Herzfeld, a money manager specializing in closed-end funds, in the Thaler camp. He aims to buy when fund shares trade at an irrationally low percentage of liquidating value and sell at a high percentage. Unlike mutual and exchange-traded funds, closed-ends don’t do redemptions, and their prices are a matter of investor whim.
“Big discounts and big premiums. It’s behavioral,” Herzfeld says. “No one reads prospectuses.” Or rather, he reads and retail investors don’t.
Read the full story on Forbes: https://www.forbes.com/sites/baldwin/2023/10/02/confessions-of-a-closed-end-fund-bargain-hunter/?sh=22f26a6c1111
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Count Erik M. Herzfeld, a money manager specializing in closed-end funds, in the Thaler camp. He aims to buy when fund shares trade at an irrationally low percentage of liquidating value and sell at a high percentage. Unlike mutual and exchange-traded funds, closed-ends don’t do redemptions, and their prices are a matter of investor whim.
“Big discounts and big premiums. It’s behavioral,” Herzfeld says. “No one reads prospectuses.” Or rather, he reads and retail investors don’t.
Read the full story on Forbes: https://www.forbes.com/sites/baldwin/2023/10/02/confessions-of-a-closed-end-fund-bargain-hunter/?sh=22f26a6c1111
Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1
Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:
https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript
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Forbes newsletters: https://newsletters.editorial.forbes.com
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Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.