NAV does not matter
Fairly often i see blogs written about funds, suggesting to buy or sell the fund solely based on price/NAV. To me, this is very flawed, in every scenario. Let us explore:
1) Some funds have access to stocks we do not. I will gladly pay more than NAV for SVVC or GSVC, which owns twitter and facebook. I can't own those, and I think they will rise in value, so I pay a premium for this access. Makes sense to me
2) Some fund managers are bad at their job. if a fund is consistently underperforming, why would I pay NAV? Sure, the fund may be temporarily undervalued, but the manager will find a way to drop the value.
3) On the flip side, some managers are very good. I will pay a premium for bill gross to pay me a 12% yield on a bond fund, rather than buy individual bonds at part and yield 4%
4) It beats paying a ton of commission. Ill pay 3% over NAV to avoid paying $10 x 100 different companies.
5) It is the same thing as book value. So unless you base your purchases solely on if the company is over or under book value, you should not have the same approach for CEF's.