EM Closed-End Fund Discount/Premium: No Longer A Sentiment Factor

April 12, 2017 BY Jun Zhu

Closed-end funds (CEFs) rarely trade at net asset value (NAV). They either trade at a premium or a discount to share price. When demand for underlying assets is high, the price of a CEF will move above its NAV, trading at a premium. On the contrary, when investors are pessimistic about the underlying assets of a CEF, the price is driven below NAV, trading at a discount. Many studies have looked at CEF discounts and premiums as a means to gauge investor sentiment toward the assets they represent.



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