Levin Law Investigating Losses Related to Closed-End Funds
The national securities and investment fraud law firm, Levin Law, P.A. (“Levin Law”), continues to investigate claims regarding the recommendation and sale of closed-end funds. Closed-end funds can involve a high degree of risk and may be unsuitable for certain investors.
Investors who have sustained losses related to investment in a closed-end fund are strongly encouraged to contact Levin Law for a free case evaluation. Aggrieved investors can call Levin Law founder and managing attorney Brian Levin directly at (305) 402-9050 or email contact@levinlawpa.com.
What Is a Closed-End Fund?
Closed-End Funds or CEFs is a type of mutual fund that unlike open-end funds only sells a limited number of shares during its initial public offering (IPO). Closed-end funds are also known as closed-end investment companies and differ in several ways from the other type of investment companies. There are many types of closed-end funds, but the most common are municipal bond funds or muni bond funds.
Closed-end funds are complex and subject to price volatility. They are less liquid than open-end funds, which are more common. CEFs may be subject to high fees and expenses. They can also result in significant losses, particularly when they use leverage to borrow money and generate income. It is imperative to have a firm understanding of the potential risks involved with investing in a closed-end fund.
The recent market downturn has cost investors in closed-end funds substantial amounts of money, with some CEFs cutting dividends by over 40%. Rising rates continue to put a stop to the normal payouts, causing retirees, often reliant on this form of investment for income, to suffer.
Why Closed-End Funds Have Cut Dividends and Distributions
As reported in The Wall Street Journal, investors in closed-end funds have seen their payouts slashed due to the recent market slump. The $270 billion CEF market has had to make jaw-dropping cuts to dividends and distributions nearly across the board.
What was once considered a source of consistent, stable payouts for retirees, has proven to be an extremely risky bet capable of causing a considerable loss of principal. CEFs which often use leverage by “borrowing money at short-term rates” were hit hard by rising rates and a downturn in the market.
While in some markets, using leverage can help boost returns, generating more income, it can also cause volatility and create more risk. Investors should be well-informed of the potential for loss of principal before investing in a CEF or other less traditional funds.
Contact Levin Law, P.A. for a Free Case Evaluation
If you sustained losses after investing in a closed-end fund, contact Levin Law, P.A. for a free case evaluation. Harmed investors can call (305) 402-9050 or email contact@levinlawpa.com to discuss their legal options. All consultations are free and confidential.
Most cases are handled on a contingency fee basis, meaning that clients are not obligated to pay Levin Law’s attorney fees unless money is recovered on their behalf.
About Levin Law
Levin Law is a premier national cryptocurrency, securities, commodities, futures, and class action law firm. Brian Levin, Levin Law’s founding attorney, has helped recover in excess of $150,000,000 through arbitration and litigation for individual and institutional investors throughout the country and the rest of the world. Levin Law represents retirees, individual investors, high-net-worth investors, ultra-high-net-worth investors, institutions, family offices, trusts, publicly held companies, and others.
