A Morningstar closed-end fund analyst recently commented on the wide array of investment strategies employed by closed-end funds, including alternative and hedge-fund-like strategies. The commentary describes the types of alternative strategies used and compares their performance to similarly managed ETFs. The following types of funds were analyzed by the author:
- Nontraditional Asset Class. This category includes closed-end funds that invest in currency and commodities, specifically gold and silver.
- Nontraditional Strategies. This category includes long/short funds (funds that hold both long and short positions) and covered call funds (funds that hold equities and write call options on individual holdings or indexes).
- Illiquid Investments. This category includes funds that are able to gain access to illiquid investments that are typically unavailable to traditional mutual funds.