How has the fund performed?
See how the closed-end fund has performed over the past five years or longer compared with its benchmark index—and an equivalent open-end fund.

What’s the discount gap?
What’s the fund’s historical one-year average discount and what’s its current discount? Consider funds that are more deeply discounted now than its historical average.

What’s the expense ratio?
Your returns will be based not only on performance and the discount but also how much of those returns must be shelled out for expenses and fees. Compare the average closed-end fund expense ratio with average ratios of open-end funds and exchange-traded funds investing in the same asset classes.

How often are distributions paid?
A closed-end fund typically makes distributions monthly or quarterly. See if you can choose to have them reinvested to maximize compounding and returns.

What about volatility?
Think of volatility as mood swings. If these swings are severe compared to the market norm, you could be facing greater risk. Why? Because while the value of your investment may be way up when markets climb, it could just as easily be way down when markets face decline or uncertainty. Steep drops could be especially bad for you if they occur just when you need to sell your investment.

An investment’s volatility is measured by something called “beta.” Closed-end funds that have a beta greater than 1 have greater price volatility than the overall market and are more risky. The same is true for individual stocks. Of course, greater risk also means a shot at higher-than-average returns when you need to sell.