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3 Funds You Haven't Heard Of That Yield Up to 9.5%

Barchart·09/02/2026 13:00:02

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Closed-end funds (CEFs) aren't nearly as well-known, nor well-held, as their more popular relatives: mutual funds and exchange-traded funds.

But that's no reason to avoid them.

CEFs have acted as staples of income portfolios for decades. They can be held in virtually any brokerage account or IRA, often sport very attractive yields, and, if timed well, they can also generate solid trading returns.

If you can think of an asset class, chances are good there is a CEF trading it. Closed-end funds can hold stocks, corporate bonds, tax-free municipal bonds and virtually every other asset under the sun. In fact, they can even hold some illiquid assets that are difficult or impossible to own within traditional mutual and exchange-traded funds. Not to mention, CEFs boast a few unique advantages that its relatives don't share.

Today, I'll present you with a handful of top CEFs to buy right now—a group of products that yield up to 9.5%.

Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

What Is a Closed-End Fund?

A closed-end fund, or CEF, is a type of investment fund that shares a number of core traits with its cousins: open-end mutual funds and exchange-traded funds (ETFs).

But what makes CEFs so special are a set of unique characteristics that in many ways allow them to behave a little differently from other fund types.

CEFs vs. mutual funds vs. ETFs

CEFs are best understood by comparing them to the competition.

You’re likely very familiar with open-end mutual funds: the investment vehicle of choice for 401(k)s and other retirement plans. But you might not understand how the sausage is made, so to speak. When you invest in an open end mutual fund, you (or your broker) sends cash to the fund, which the manager then uses to buy stocks, bonds or other securities. And when you redeem, the mutual fund manager will send you or your broker the cash, even selling securities to free it up if need be.

Exchange-traded funds are different. Investors can buy or sell ETFs exactly as they would any stock. They trade on major stock exchanges. Unlike mutual funds, you don’t actually send the manager money; you buy shares from other investors. New ETF shares can be created or destroyed by institutional investors based on market demand. (When shares are created, an institutional investor will essentially buy up the shares of stocks and bonds owned by the ETF, then trade them to the fund for shares of the ETF itself. When shares are destroyed, the institutional investor receives the underlying holdings.) This creation and destruction of new ETF shares ensures that the ETF’s market price never deviates too far from the net asset value (NAV), or the value of the underlying holds.

And this brings us to CEFs.

Like open-end mutual funds and exchange-traded funds, closed-end funds are pooled investment vehicles. You have many investors pooling their assets into a common fund, which is invested by a manager or a team of managers. (And while mutual funds and ETFs can be index funds, which are rules-based and effectively run by computers, all CEFs are actively managed.) Unlike mutual funds—but like exchange-traded funds—closed-end funds trade on a stock exchange. You buy the shares in a brokerage account and never send the manager cash.

Because ETFs and CEFs don’t have to meet redemptions like open-end mutual funds, liquidity is less of an issue. They can hold thinly traded or illiquid securities without having to worry about selling them due to a wave of redemptions.

But unlike exchange-traded funds, closed-end funds have no creation or destruction of shares. A CEF actually holds an initial public offering (IPO) when it creates its shares, and that number of shares is fixed. That might sound like a mundane detail, but it’s actually one of the most important aspects of CEFs.

Because of that, these funds can trade at a premium or (ideally) discount to their net asset value (NAV). That means we can effectively buy the assets they hold for less than they're worth.

CEFs also have the ability to borrow money and reinvest it into their portfolio (debt leverage), which can juice yields and returns (but also accelerate losses).

And while closed-end funds tend to pay high yields, their payouts are technically “distributions,” which come from some combination of interest on fixed income or other interest-bearing securities, dividends from stocks, realized capital gains, and return from capital. Thus, tax compliance can be a bit of a headache.

Potential investors should also know that closed-end funds tend to have higher expense ratios than ETFs and even mutual funds. That's in part because they're actively managed, but also because they often include interest expenses related to the use of leverage. All fees listed for the funds I'll discuss include interest expenses where applicable.

Related: 10 Best Brokerage Promotions, Bonuses + Deals

The Best Closed-End Funds You Can Buy

Now that you know more about closed-end funds, let’s take a look at some of the best CEFs out there. The following three funds are from my larger list of the best CEFs to buy for yields of up to 17.2%.

Calamos Strategic Total Return

Style: Moderately aggressive allocation
Assets under management: $3.6 billion
Distribution rate: 7.7%
Distribution frequency: Monthly
Expense ratio: 3.69%, or $36.90 per year on $1,000 invested

The Calamos Strategic Total Return (CSQ) is an "allocation fund" (aka "balanced fund"), which is just a fund that invests in both stocks and bonds, typically in some sort of predetermined range. Specifically, CSQ is categorized by Morningstar as a "moderately aggressive allocation" fund, defined as having 70% to 85% of assets invested in equities, and the remainder invested in fixed income.

CSQ doesn't always aim for that level—it actually only pledges to include "at least 50% in equities"—but at two-thirds of its assets currently invested in stocks, it's close. And those equity holdings are similar to what you'd see in an S&P 500 or other large-cap fund right now: a lot of blue-chip names with a big emphasis on technology (roughly a third of assets). Top equity holdings right now include the likes of Nvidia (NVDA), Apple (AAPL), and Google parent Alphabet (GOOGL).

The CEF's remaining assets are spread among a variety of fixed-income securities; predominantly convertible debt and high-yield corporate bonds, but also preferred stock, asset-backed securities (ABSes), and other issues.

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Calamos Asset Management founder John Calamos and a team of advisers commonly use a healthy heaping of debt leverage; it's almost 30% right now, which is on the higher side. Remember what I said above: Leverage lets management to invest more than its actual assets in hand. That's a double-edged sword: It improves the fund's yield and amplifies gains when the fund's assets grow in value, but it can also amplify losses.

So while CSQ's portfolio has less stock exposure than a typical moderately aggressive allocation fund, that high leverage makes the fund more aggressive—and thus its performance is more volatile—than other mutual funds or ETFs in the category.

Calamos Strategic Total Return has historically performed in line with the S&P 500, with periods of outperformance on the way up, and underperformance on the way down. The fund finished less than 2 percentage points behind the S&P 500 in 2025, for instance. It's ahead by 5 points year-to-date in 2026. That's saying something given that CSQ is a stock/bond portfolio while the S&P 500 is all equities.

In the meantime, you can buy shares at a nice 8% discount to NAV, which is cheap relative to their five-year average discount of 3%.

General American Investors

Style: Large-cap stock
Assets under management: $1.8 billion
Distribution rate: 9.5%
Distribution frequency: Annually
Expense ratio: 1.07%, or $10.70 per year on $1,000 invested

Let's move on to equity CEFs.

General American Investors (GAM) is the type of fund you should own if you want traditional large-cap exposure in CEF format.

General American Investors, founded in 1927, is the oldest surviving CEF—a pretty straightforward and narrow fund that seeks out growth stocks trading at reasonable prices. President, CEO, and Portfolio Manager Jeffrey W. Priest has built a portfolio of roughly 70 predominantly large-cap stocks. Some top holdings, such as Apple and Berkshire Hathaway (BRK.B), you can find at the top of most large-cap index funds. But Priest has also put an emphasis on a few midsized and smaller large caps, such as waste disposal company Republic Services (RSG) and insurer Arch Capital (ARCH).

GAM uses a moderate amount of leverage (10% currently). Between that and the low-yield nature of its holdings, you might correctly guess that a decent chunk of the fund's yield comes from sources other than true dividends. Fortunately, these capital-gains distributions are almost always long-term in nature, so they're tax-friendlier than many trade-happy large-cap CEFs.

The annual distribution schedule leaves something to be desired. But it's hard to complain about returns: Over the past 30 years, GAM has massively outperformed the S&P 500, by about 2,175% to 1,900%, on a total-return basis (price plus dividends).

General American Investors trades at a 10% discount to NAV, which appears steep at first glance. It's not bad, but it is pricier than the 15% average discount across the past five years.

Cohen & Steers REIT & Preferred Income Fund

Style: REITs and preferred stock
Assets under management: $1.0 billion
Distribution rate: 8.0%
Distribution frequency: Monthly
Expense ratio: 3.37%, or $33.70 per year on $1,000 invested

Real estate investment trusts (REITs) have gone through some rough patches over the past few years.

Because REITs have always had a major emphasis on income, investors have come to view them as a bond substitute. But when bond yields started to surge higher again in 2022, bond prices collapsed … and REIT prices fell in sympathy. In 2024, however, when it appeared that bond yields had topped out, REITs mounted a strong recovery … only to flatline between late 2024 and the end of 2025 despite numerous interest-rate drops.

Where will REITs go from here? It's hard to say. REITs have delivered roughly market-matching performance in 2026 despite rising bond yields. Of course, inflation has proven stubborn and sticky, which is actually helpful to REITs in that the rents they collect from tenants also trend higher in line with inflation.

One way to play continued strength in REITs is via the Cohen & Steers REIT & Preferred Income Fund (RNP). The fund splits its assets between REIT common shares (the regular stock you and I usually own) and REIT preferred stock (high-yield "hybrid" securities that have features of both stocks and bonds). At the moment, top holdings include the likes of senior housing and medical property owner Welltower (WELL), datacenter specialist Digital Realty Trust (DLR), and infrastructure REIT American Tower (AMT).

If you believe that REITs are attractive, RNP is a solid option. It yields 8% at current prices thanks in part to a high 30% in leverage. And it trades at a 6% discount to NAV that's much deeper than its five-year average discount of 1%.

Learn More About These and Other Funds With Morningstar Investor

If you're buying a fund you plan on holding for years (if not forever), you want to know you're making the right selection. And Morningstar Investor can help you do that.

Morningstar Investor provides a wealth of information and comparable data points about mutual funds, ETFs, and even CEFs—fees, risk, portfolio composition, performance, distributions, and more. Morningstar experts also provide detailed explanations and analysis of many of the funds the site covers.

With Morningstar Investor, you'll enjoy a wealth of features, including Morningstar Portfolio X-Ray®, stock and fund watchlists, news and commentary, screeners, and more. And you can try it before you buy it. Right now, Morningstar Investor is offering a free seven-day trial and a discount on your first year's subscription when you use our exclusive link.