In my view, Closed End Funds (CEF) are very similar to mutual funds with 1%+ of expenses, and many are actively managed. The difference lies in trading and not able to create new units. When I started investing few years back, in income domain, I was attracted by high yields. While I got rid of quite a few CEFs, I still continue to hold IIA, IGD, and AOD.
Among others, one of the issue with these funds (for which I get annoyed) is the way the fund managers drift away from objectives and execution strategy. Investors continue to remain invested under the impression that fund managers are continuing to stick to the originally stated objectives. Furthermore, there is nobody to question these managers. The whole premise of using actively managed funds (including CEFs) is that managers will keep up original objectives and use their skills for reducing downside risk. Let me discuss two examples: