Recent Closed-End Fund, ETF and REIT IPOs

Closed-end fund IPOs deserve real caution

A closed-end fund IPO prices at around $10 per share, but a portion of that — historically in the 4% to 7% range — goes to underwriting and offering costs. The fund therefore begins life with a net asset value below what you paid for it.

Because CEFs trade on supply and demand rather than at NAV, many new funds drift to a discount within the first six to twelve months as underwriting support ends. Buyers at issue not infrequently find themselves down several percent on a fund whose portfolio performed perfectly well.

The patient approach is to wait for exactly that discount and buy the same portfolio for less than it is worth. This is one of the more durable patterns in income investing.

ETFs and REITs behave differently

ETF launches do not carry the same structural problem, because continuous creation and redemption keeps the price near NAV from day one. The questions for a new ETF are the expense ratio, what the index actually holds, and whether it will gather enough assets to survive.

REIT IPOs are ordinary equity offerings and should be judged on the property portfolio, the leverage and whether the intended distribution is covered by AFFO — not by any quirk of the listing mechanism.

About this data

QuantumOnline has tracked exchange-traded income securities since 1997. Every security in this list is researched and maintained by hand from the issuer's prospectus and SEC filings, not scraped from a vendor feed. Where a figure is unavailable we show "n.a." rather than guessing.

Information is believed to be accurate but is not guaranteed, and nothing here is a recommendation to buy or sell. Always confirm terms against the issuer's prospectus before investing.