Fund of Funds Offers Enhanced Income (FOF, PCEF)

With interest rates still hovering near zero, many retired and future retirees are looking for ways to squeeze more income out of their portfolios. Recent interest in closed ended funds has skyrocketed as their use of leverage can result in outlandishly sized dividend yields. However, analyzing individual closed end funds can be a tedious task for most investors. Discounts to net asset value, distributions that include “returns of capital” and increased volatility due to their leverage are often reasons why individual investors stay away from the fund structure. These assets income generating abilities shouldn’t be ignore by investors and there are two ways to add closed end funds to portfolio easily. The PowerShares CEF Income Composite

is an exchange traded fund that invests in 71 closed ended funds spread across three sectors: General Bond, High Yield Bonds and Option Income Stock funds. The PowerShares fund yields 8.35% and pays a monthly dividend. Cohen & Steers Closed-End Opportunity

is itself a closed ended fund that trades at a nearly 9% discount to its net asset value. The CEF invests in 86 other funds and currently yields 7.63% and pays quarterly Investors seeking to enhance their portfolios income abilities may want to take a look at these two funds.