Having trouble getting my head around how the intrinsic “value” (now or in the future) to shareholders of perpetual CEFs works. In recent years there’s been a number of limited term CEFs opened (purely by way of example): Blackrock’s BCAT. The prospectus for this type of CEF sets a “liquidation date” in the future (perhaps 10 years) when the fund’s assets will be sold off and the shareholders paid based on NAV at that time. Usually there’s language to the effect that the board of directors / shareholders may at such time decide to extend the date of fund’s liquidation a number of years.
OK - That all makes sense to me. No matter how far above or below NAV the CEF is trading at any given time, shareholders know that if they hang on until the liquidation date they will receive the actual NAV of shares owned. But what about the other (perpetual) type? Is there any intrinsic value in the asset base / shares outstanding that is transferable to shareholders, or is it a game of charades? I’m sure someone smarter than me can answer that. Also, perhaps voice a preference for one type CEF or the other.