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  5. CGI: I would appreciate your opinion of the closed-end investment fund Canadian General Investments, trading directly on the TSX. [Canadian General Investments Limited]
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Q: I would appreciate your opinion of the closed-end investment fund Canadian General Investments, trading directly on the TSX. What are the pros and cons of investing in such a fund?
Asked by Gregory on July 23, 2024
5i Research Answer:

CGI has been around for a very long time, as one of Canada's first closed-end funds. CGI focuses on capital appreciation and dividend growth. In the last 50 years, CGI’s long-term track record of compounding 11.5% vs the TSX of 9.2% speaks for the sustainability of the strategy. According to the most recent update, CGI’s net asset value is $62.50, compared to CGI’s share price of around $38.50, which means investors can have exposure to the underlying equities at a discount. CGI also employs leverage, but the level is conservative, the debt is around 13% of the net assets. Some of the pros and cons of investing in closed-end funds are: 

Pros: Investors can buy at a discount to net asset value (like CGI). Or the fund itself could issue more units if the share price trades at a premium to NAV. It provides professional management and diversification.
Cons: Some closed-end funds may lack the necessary transparency and hold private investments (which are hard to evaluate). The discount could widen, setting up a loss for investors. There are fees. Some closed end funds can be very illiquid.