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GAM

The Market's Panic Is Our Payday: 5 Cheap CEFs Yielding Up to 12.9%

April 10, 2026 — 09:30 am EDT

Written by

BNK Invest for

BNK Invest->

We contrarians love a good panic. Dividends are on sale!

The closed-end fund (CEF) aisle is where we do our best bargain shopping. Wall Street ignores CEFs, creating obscurity that we feast on. Discounts, mispricings and high yields are here.

Why the bargains? CEFs routinely go on sale. Thanks to their low profiles, supply and demand imbalances routinely disconnect a CEF's price from its underlying assets.

When the value swings heavily in our favor, we buy.

And we have some dandy discounts now, with some big divvies attached! These five yields have soared to levels between 6.3% and 12.9%.

Plus, they are trading at discounts up to 12%. Which means we can buy these assets for as little as 88 cents on the dollar.

General American Investors (GAM)

Distribution Rate: 10.8%

General stock-market volatility is likely to draw out some of that inefficiency I just mentioned, so let's start with a couple broader-market funds.

General American Investors (GAM), for instance, is a large-cap growth CEF that has more than a quarter of its assets invested in the banged-up tech sector, as well as double-digit exposure to the reeling financial and consumer discretionary sectors. Top holdings such as Alphabet (GOOG), Microsoft (MSFT), and Berkshire Hathaway (BRK.A) have been down to downright dreadful so far in 2026.

While it targets growthier stocks, GAM is technically a "large blend" fund, so we can horse-race it against the S&P 500--and the fund's managers aren't afraid to, either. Here's a look at the fund's performance versus the venerable index through the end of 2025:

Source: General American Investors Fact Sheet

Consider this: Only about 10% of large-cap mutual fund managers have been able to beat the index over the trailing 15 years. GAM boasts a performance edge over the past half-century. That's an enviable track record.

The real draw of General American Investors, though, is how we receive those returns. An S&P 500 fund today will only deliver a little more than 1% of its annual performance in the form of dividends; however, GAM's distributions--which admittedly are taxed somewhat differently because of their makeup--would deliver closer to 11% based on today's distribution rate.

But this is where we need to be careful about valuation. Yes, GAM currently trades at a discount of nearly 12% to its net asset value (NAV). In many cases, that would represent a screaming bargain--but over the past five years, GAM, on average, has traded at a 15% discount. So it's a nominal deal, but a relative premium.

Liberty All-Star Equity Fund (USA)

Distribution Rate: 12.9%

A stock CEF with far better relative value is Liberty All-Star Equity Fund (USA)--the first of two 12%-plus yielders on my radar.

This is another "blend" fund, but unlike GAM, it tilts toward value. Its roughly 140 stock picks have been selected by five teams of managers--three value-oriented and two growth-oriented, reflecting its typical 60/40 value/growth split.

The top holdings include many of the blue chips names every large-cap fund seems forced to hold--Nvidia (NVDA), Alphabet, Microsoft--but it has also elevated names such as Capital One (COF), Charles Schwab (SCHW) and Fresenius Medical Care (FMS).

Like with GAM, the bulk of USA's returns come from its massive distribution. Performance hasn't been as good, but over the long term, Liberty All-Star Equity has been pretty competitive with the S&P 500. A modest amount of debt leverage (where the fund borrows money to invest even more in its pick) has generally led to amplified gains in up markets, but deeper dips in down markets.

But USA's chart has gotten really interesting of late.

This Is a Big Deviation From Liberty All-Star Equity's Norm

For a few months in the back half of 2025, USA seemed to completely disconnect from the market in a bout of severe underperformance. But part of that was an implosion in its valuation. USA has long traded roughly in line with its net asset value, but it's currently trading at a 10% discount to NAV--about as big a sale as shares have offered in the past five years.

Calamos Strategic Total Return Fund (CSQ)

Distribution Rate: 8.4%

Let's start to shift toward fixed income with the Calamos Strategic Total Return Fund (CSQ): a straightforward do-it-all CEF that owns both stocks and bonds.

Specifically, CSQ management is tasked with investing at least 50% of its assets in equities, and the rest in "convertibles and fixed-income securities deemed beneficial during periods of high