The recent market turmoil has created interesting buying opportunities in a seldom talked-about type of investment, Closed-End Funds or CEFs for short. For those of you who are not familiar with CEFs, they are a group of stocks or bonds that reside under one ticker like a mutual fund, but they trade constantly throughout the day, like an ETF. Unlike regular funds where investment managers can sell new shares to raise more money to invest, closed-end funds are a fixed pool of money with a specific number of shares. Enough background. Here's the interesting investment opportunity. The recent volatility in the markets has caused many CEFs to sell off significantly more than the value of their underlying assets (which are easy to value because most of them are public companies or bonds), creating a significant discount to these funds' Net Asset Values (NAV). Any time I can buy something that's worth a $1 for $0.90 or less I start to get interested. According to Fitch Ratings the average CEF now trades at an astonishing 9.9% discount to its NAV. Source: Closed-End Fund Association, Inc. (click to enlarge) So what CEFs are cheap right now? Here's a list of a few: Tri-Continental Corporation $TY: 14% discount to NAV Zweig Fund $ZF: 15% discount BlackRock Corporate High Yield $HYT: 8% discount to NAV Western Asset High Yield $HYI: 8% discount to NAV ASA Gold and Precious Metals $ASA: 19% discount to NAV Gamco Natural Resources $GNT: 11.5% discount to NAV European Equity Fund $EEA: 12.5% discount to NAV Swiss Helvetia Fund $SWZ: 15.5% discount to NAV Voya Infrastructure Fund $IDE: 19.5% discount to NAV Voya International High Dividend Equity $IID: 13.5% discount to NAV Blackrock Municipal Investment Quality Trust $BAF: 12% discount to NAV What's the catch? For one, Mr. Market always seems to apply some discount to CEFs. So don't expect a fund that trades at a 15% discount to its NAV to magically increase by 15%. The spread between CEF share prices and their NAVs will likely eventually narrow by several percent, but likely not by the entire amount. Furthermore, if you don't hedge your exposure to a CEF that you buy because of a discount, you leave yourself vulnerable to a selloff in the overall stock market or the particular asset class that the fund invests in. This is particularly true for CEFs that use leverage, and many do. Lastly, there's no telling how long it will take for the discount to NAV to close and the managers' fees of the CEF will begin to add up over time. Despite these negatives, many CEFs look ripe for the picking right now. Sources: Market turmoil kicks up opportunity in deeply discounted funds http://finance.yahoo.com/news/market-turmoil-spurs... Closed-End Funds Trading At A Discount To NAV http://seekingalpha.com/article/3478326-closed-end... Average Closed-End Fund Discount Widens to Nearly 10% http://blogs.barrons.com/incomeinvesting/2015/08/3... 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The bond bear that cried wolf https://blog.columbiathreadneedleus.com/the-bond-b... Bill Gross: Fed tightening now could create self-inflicted instability http://finance.yahoo.com/news/bill-gross-fed-tight... . Thanks for reading. If you liked the article (or even if you didn't but are just feeling particularly kind today), please give it a thumbs up or comment below. Also, if you haven't already, make sure to click on the link at the top of the page to join this new special situation investing community. Doing so will enable you to receive notification when new articles are published here and to share your own ideas. Also, make sure to follow me on Twitter @TMFDeej. https://twitter.com/TMFDeej!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?'http':'https';if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+"://platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); Have a great day!