Wall Street Managers Pile Into Closed-End Funds on Discounts (1)

Money managers ranging from Boaz Weinstein’s Saba Capital Management to AQR Capital Management are pouncing on historic dislocations in a normally sleepy corner of the investment world.

The firms are buying what are known as closed-end funds, which invest in cash-generating assets like junk debt, muni bonds, or even stocks that pay dividends. They’re typically pitched to retirees looking for regular income, but with bond yields jumping, many individual investors have seen the value of their holdings drop, and are looking to bail out.

Boaz Weinstein

Photographer: Jeenah Moon/Bloomberg

Their mass departures are translating to bargain prices, which are drawing hedge funds. ...