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10 Best Closed-End Funds for 2023

July 26, 2023

7 min Read

Written by Daria Uhlig

Edited by Susan Kim

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The funds most investors are accustomed to are open-ended ones like mutual funds and exchange-traded funds — they can issue new shares when they want to raise money, and investors can buy the shares, usually through a broker, at the going rate.

See: 3 Things You Must Do When Your Savings Reach $50,000

Not so with closed-end funds. Following an initial public offering for a set number of shares, shares will never be issued again. The only way for an investor to buy or sell a CEF is by trading them on the New York Stock Exchange or another secondary market.

How Do Closed-End Funds Work?

CEFs, like mutual funds and ETFs, invest in a portfolio of securities. The issuer uses the total value of the portfolio to calculate the fund’s net asset value, or NAV. CEFs also have a market price, or share price. When that market price is higher than the NAV, the CEF is said to be trading at a premium. When the market price is lower than the NAV, shares are said to be trading at a discount.

The funds aim to pay out monthly or quarterly distributions to investors. The distributions might consist of interest income, dividends, capital gains or a combination of those generated by the portfolio’s investments.

CEFs may also return some of the investors’ principal, or capital, from the fund’s assets. This raises a red flag if it happens frequently because it could mean the fund’s holdings aren’t generating enough income for the fund to pay distributions. Return of capital also has tax consequences distributions don’t have, according to the Financial Industry Regulatory Authority.

Best Closed-End Funds for 2023

Here are some of the best closed-end funds to consider in 2023:

Abrdn Total Dynamic Dividend Fund (AOD)
BlackRock ESG Capital Allocation Term Trust (ECAT)
Cohen & Steers Quality Income Realty Fund (RQI)
Cornerstone Total Return Fund (CRF)
Eaton Vance Tax-Managed Global Diversified Equity Income Fund (EXG)
John Hancock Tax-Advantaged Dividend Income Fund (HTD)
Nuveen Real Asset Income and Growth Fund (JRI)
Tekla Healthcare Opportunities Fund (THQ)
Thornburg Income Builder Opportunities Trust (TBLD)
Virtus Diversified Income & Convertible Fund (ACV)

1. Abrdn Total Dynamic Dividend Fund (AOD)

The Total Dynamic Dividend Fund from Abrdn aims for high current dividend income primarily, and long-term growth of capital secondarily. Most of the fund’s assets are North American securities, with information technology and financials comprising the top two sectors, representing over 30% of the portfolio.

Net assets: $1 billion
Net asset value: $9.52
Market price: $8.26
Premium/discount: 13.24% discount
Distribution rate: 7.15%
Management fee: 1.02%

2. BlackRock ESG Capital Allocation Term Trust (ECAT)

Launched in September 2021, the BlackRock ESG Capital Allocation Term Trust invests in a portfolio of equity and debt securities with the goal of providing total return and income through current income and long-term capital appreciation. As a tactical allocation fund, its composition could favor equity securities or debt securities at any given time. At least 80% of the portfolio is invested in securities that meet certain environmental, social and governance standards.

Net assets: $1.78 trillion
Net asset value: $18.01
Market price: $15.74
Premium/discount: 12.60% discount
Distribution rate: 9.53%
Management fee: 1.25%

3. Cohen & Steers Quality Income Realty Fund (RQI)

The Cohen & Steers Quality Income Realty Fund aims to achieve high current income through its investments in real estate securities such as stocks, and other equity securities issued by real estate companies, including real estate investment trusts and REIT-like companies. Capital appreciation is the fund’s secondary objective. The portfolio spans a diverse range of sectors, with industrial, infrastructure and healthcare the most heavily weighted.

Managed assets: $2.4 billion
Net asset value: $12.62
Market price: $11.60
Premium/discount: 8.08% discount
Distribution rate: 8.28%
Management fee: 1.45%

4. Cornerstone Total Return Fund (CRF)

Unlike many funds on this list, the Cornerstone Total Return Fund’s primary objective is capital appreciation, and it seeks current income secondarily. Under normal conditions, most of its holdings consist of equity securities of large-, mid- and small-capitalization companies. Apple, Microsoft and Amazon are its top holdings. Together they comprise nearly 17% of the portfolio.

Managed assets: $714.75 million
Net asset value: $6.78
Market price: $8.20
Premium/discount: 20.94% premium
Distribution rate: 20.76%
Management fee: 1.15%

5. Eaton Vance Tax-Managed Global Diversified Equity Income Fund (EXG)

Dividend-paying stocks and U.S. and foreign index options generate the Eaton Vance Tax-Managed Global Diversified Equity Income Fund’s cash flow while allowing investors to minimize and defer federal income tax on their gains. The fund pays monthly distributions. U.S. holdings include tech stocks Microsoft, Alphabet and Apple. Top foreign holdings are Nestle SA and Novo Nordisk A/S.

Managed assets: $2.7 billion
Net asset value: $8.43
Market price: $7.81
Premium/discount: 7.35% discount
Distribution rate: 8.50%
Management fee: 1.07%

6. John Hancock Tax-Advantaged Dividend Income Fund (HTD)

The primary goal of the John Hancock Tax-Advantaged Dividend Income Fund is to achieve a high level of after-tax return from dividend income and capital appreciation. John Hancock recommends the fund for investors looking for tax-sensitive equity income. The fund is weighted toward utilities, with electric utilities making up the largest industry it invests in and utilities making up the largest sector, with 30.88% and 58.22%, respectively.

Managed assets: $1.17 billion
Net asset value: $21.48
Market price: $20.40
Premium/discount: 5.40% discount
Distribution rate: 7.97%
Management fee: 1.09%

7. Nuveen Real Asset Income and Growth Fund (JRI)

The Nuveen Real Asset Income and Growth Fund invests in real assets such as REITs and companies that own, operate or develop infrastructure projects, facilities and services. Up to 40% of the portfolio might be invested in debt securities, all of which might be rated below investment grade. Foreign assets make up 25% to 75% of the portfolio. Those factors make this one of the risker funds in this roundup, and its fees are high, but its performance has been solid since its inception.

Managed assets: $527.13 million
Net asset value: $13.70
Market price: $11.72
Premium/discount: 14.45% discount
Distribution rate: 8.91%
Management fee: 1.38%

8. Tekla Healthcare Opportunities Fund (THQ)

The Tekla Healthcare Opportunities Fund invests strictly in the healthcare industry, with the goal of providing current income and long-term capital appreciation. Holdings might include equity securities, which currently make up over 82% of the portfolio, debt securities and investment vehicles, according to the fund’s fact sheet. The fund trades on the New York Stock Exchange under its THQ ticker.

Managed assets: $1.09 billion
Net asset value: $21.78
Market price: $19.33
Premium/discount: 11.25% discount
Distribution rate: 7.2%
Management fee: 1.24%

9. Thornburg Income Builder Opportunities Trust (TBLD)

The Thornburg Income Builder Opportunities Trust invests in a broad range of income-producing equity and debt securities of U.S. and international companies. Its goal is to generate current income from options premiums and improve risk-adjusted returns. Financial securities make up almost 25% of its holdings.

Managed assets: $551.7 million
Net asset value: $17.89
Market price: $15.55
Premium/discount: 13.08% discount
Distribution rate: 8.04%
Management fee: 1.25%

10. Virtus Diversified Income & Convertible Fund (ACV)

The Virtus Diversified Income & Convertible Fund invests 80% of its net assets in a portfolio of convertible securities, income-producing investment securities and income-producing debt and other instruments of varying maturities, according to its fact sheet. With a limited term set to expire May 22, 2030, the fund’s objective is to provide a total return through current income and capital appreciation while protecting against capital loss. ACV trades on the New York Stock Exchange.

Managed assets: $328.57 million
Net asset value: $21.57
Market price: $20.14
Premium/discount: 6.63% discount
Distribution rate: 10.81%
Management fee: 1.32%

Should You Invest In Closed-End Funds?

Closed-end funds can be a good choice for diversifying your portfolio. However, they’re more complicated than the mutual and exchange-traded funds most investors are more familiar with, so do your due diligence and consult with a fiduciary financial advisor before you invest.

Data was compiled on July 24 and July 25, 2023, and is subject to change.

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