Michael Foster

In December 2025, things looked rough for our favorite high-yield real estate investment trusts (REITs)—and the 8%+ paying closed-end funds (CEFs) that held them.

Imagine a credit fund that yields 15.3% and is built to deliver strong returns in all rate environments.

Investors often learn more from losses than wins. This report examines three of 2026's worst-performing Closed-End Funds (CEFs) with market caps over $250 million to highlight common pitfalls. The Sprott Physical Platinum and Palladium Trust (SPPP) and Sprott Physical Silver Trust (PSLV) both hold physical precious metals, experiencing significant declines as platinum, palladium, and silver slump after a 2025 surge. These funds offer no dividends, compounding investor losses. The third laggard, Oxford Lane Capital Corp. (OXLC), invests in Collateralized Loan Obligations (CLOs). Despite a once-high dividend yield, its stock price has plummeted over 42%, and its dividend was halved in April, with further cuts anticipated. These cases underscore the risks of undiversified metal investments and high-yield funds based on volatile debt derivatives.

Current market anxieties stem from rising oil prices due to Middle East conflicts and the emergence of powerful Chinese AI models like Moonshot AI's Kimi K3. These concerns, however, echo past market fluctuations that ultimately saw strong recoveries, particularly in tech. The underlying US economy remains robust, with Q2 S&P 500 revenue soaring 13.2% and unemployment staying low, signaling strong demand. This economic resilience, despite geopolitical and tech-related worries, presents a buying opportunity. Investors are advised to consider diversified, high-yielding closed-end funds (CEFs). The Adams Diversified Equity Fund (ADX) is highlighted as a prime example, an actively managed fund with a nearly century-long history, consistently outperforming the S&P 500 and offering an attractive 8% dividend yield, currently available at a modest discount.

AI hedge fund Situational Awareness, led by Leopold Aschenbrenner, imploded due to excessive 400% leverage and poor risk management during a semiconductor selloff. Despite growing to $45 billion, a 25% sector drop triggered margin calls, forcing the fund to sell assets, including to Citadel. This exposed the fund as merely "levered beta." While Situational Awareness is still up 80% for the year due to private investments, its public portfolio suffered. In contrast, well-managed Closed-End Funds offer a safer tech investment. The Columbia Seligman Premium Technology Growth Fund (STK) is highlighted, trading at an 8.9% discount, holding top tech stocks, and outperforming the S&P 500 with reasonable leverage and a 3.8% yield.

The PIMCO Dynamic Income Strategy Fund (PDX), a high-yield bond fund, has significantly outperformed the S&P 500 over the past five years. It currently offers a robust 7.5% yield, enhanced by special dividends, and trades at an attractive 8.8% discount to its net asset value. This opportunity stems from high-yield bonds being overlooked due to interest rate concerns and exaggerated fears of corporate defaults, despite historical default rates averaging only 2.5%. Analysts suggest now is a prime time to buy, anticipating bond prices to rise as rates decline and PDX's unusual discount narrows, bolstered by PIMCO's strong reputation. The fund's diversified portfolio and modest leverage further support its stability and upside potential.

The stock market and high-yielding closed-end funds (CEFs) are poised for a spike, driven by a recent jobs report that, despite showing 23,000 lost positions, signals potential Federal Reserve rate cuts. The report's headline figures are misleading; public education accounted for 99,000 job losses, while private-sector hiring actually grew. Declines in finance and hospitality are attributed to AI efficiency and seasonal factors, not underlying weakness. The economy is stronger than perceived, creating an opportune moment for investors. This environment favors discounted CEFs, offering high dividends, price gains, and closing NAV discounts. The BlackRock Technology and Private Equity Fund (BTX) is highlighted as a prime example, boasting a 7.3% monthly yield, a 10.7% discount to NAV, and a strong portfolio including top tech firms like NVIDIA and Anthropic. Its dividend is sustainable, making it an attractive buy for future gains and steady income.

I'm sure you've heard about the worries around private credit . They really hit the wall when Blue Owl Capital, a major private lender, put redemption limits on one of its funds earlier this year.

The media has been abuzz with fresh fears that the AI bubble is finally popping These worries, of course, have been around for almost as long as AI itself!

Today we're going to look at a closed-end fund (CEF) that seemingly offers everything A 6.7%-yielding dividend that pays monthly.