Economists have long been baffled by CEFs. Many investors (including myself) and most economists subscribe to the "efficient market theory" of stock selection which says that stock prices usually reflect all that is known about the stock's prospects. That is, stock picking is futile. A dartboard or Index fund is just as good as an MBA from Harvard or MIT. http://en.wikipedia.org/wiki/Efficient-market_hypothesis
My own stock money is mostly in Index funds and I've done VERY well for the 20 years I've used that approach. Very few mutual funds or even hedge funds beat the S&P Index when dividends are included.
There are arguments against the EMT: Warren Buffett, for one! How does he usually beat the averages for many decades?
Then there are CEF oddities. Why do some sell at discounts for very long periods? And--more puzzling, why do some sell at premiums, sometimes bizarrely high premiums? Some very, very brainy economists have been unable to solve that that puzzle: http://www.economics.harvard.edu/faculty/shleifer/files/closed_end_mut_funds.pdf
Yes, AOD sells for a (deserved) discount. It's performed terribly since it IPOed in 2007 at $20 a share. Low yield/high quality CEF's like TY and ADX sell at discounts that have sometimes exceeded 25%!
But how does one explain the current premiums on CEFs that are nearly as stinky, such as AGD or the Cornerstone Funds? Read the Seeking Alpha articles in the IBOX and see what some very smart professional analysts and investment hobbyists have to say.
--- Read my posts on this board: I don't like AOD, AGD or the Cornerstone funds. My money is in SPY, QQQ and Diamonds and the like. Overall, those have beaten AOD, AGD, CFP and the other cornerstone CEFs. Ultra high yield CEFs are sucker bets.
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