It’s an intriguing question because the two fund types act very differently. So let’s dive into these differences, and the benefits both breeds offer, so you’ll know which fits best in your portfolio now.
Equity Vs. Debt Funds
Put simply, an equity CEF has more than half its assets in stocks, while a debt CEF has more than half its assets in debts—usually corporate bonds, junk bonds or municipal bonds. Sometimes the lines get blurred, like with convertible-bond funds that also buy stocks. But in most cases, a CEF will focus either on stocks or one type of bond or another.