When managing a portfolio of closed-end funds (CEFs), sometimes the valuation of funds you own are less important to consistently evaluate than the funds you don’t own. This is a key reason why every CEF investor should maintain a watch list of familiar funds.
But unlike watching a list of equity ETFs, where nearly every move is relatively correlated with the daily fluctuations of S&P 500 index, and small divergences happen over time. In CEFs you can actually view dislocations happen in real time, since there is no guarantee of any meaningful correlation with fixed income or equity prices.