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Closed-end Fund % Discount to N.A.V
Description | Calculation | Strategy | View Chart
Time Frame: Intermediate
Category:
Contrary Opinion
Closed-end funds rarely trade exactly at their Net Asset Value (NAV). They often trade at a discount when investors are bearish, or at a premium during optimistic periods. The discount or premium at which closed-end funds trade is a reflection of investors' appetite for stocks. Although this index is relatively new, it has demonstrated that extremes in the average discount may be early predictions of future market conditions.
Calculation & Significant Levels
Discount to Net Asset Value: Is calculated weekly by Thomas J.Herzfeld Advisors. It is the average discount in a basket of 17 equally weighted closed-end funds which invest primarily in U.S. equities. A measure of less than -11% is a bullish indication. A reading greater than -3% is a warning of an overly optimistic market.
Formula:
(price of Herzfeld Closed-End Average)-(NAV of Herzfeld Average)
Gauge Elements: Magnitude
Updated: Weekly (as of Friday close)
During this indicator's limited history, the markets have experienced strong bull runs when the discount to NAV has been less than -11%. When the discount to NAV has been greater than -3% equities have been weak.
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