I’m convinced that no one gets a bargain when it comes to buying a new car or showroom furniture. Those deals just don’t exist.

But when some investors say the market is too expensive, I’m not convinced. There’s always a bargain somewhere. Granted, it may be a bargain for a reason that will ensure it becomes even cheaper. But it’s usually the case that those who can’t find anything to buy aren’t looking hard enough.

Yes, I agree that stock markets are at record highs. Making a broad-based bet on the market moving up could make an investor wonder aloud if he’s paying too much. If he was focusing on the most widely-held names, he’d would be correct.

If a bond investor was seeking income, he’d have to buy the longest maturities available to get paid anything. Even then, those yields would be miserly, not to mention the principal risk involved with a longer maturity and the threat of rising rates.

Despite those challenges, I’ve found a closed-end fund (CEF) that trades at an attractive discount relative to its net asset value (NAV) and the market, throws off a well above average income stream, and can hedge an entire portfolio against market volatility.

The Voya Global Equity Dividend and Premium Opportunity Fund (NYSE: IGD) is one of the best all-in-one packages I’ve found in quite a while. The fund’s primary objective is generating a high level of current income, while still provisioning for capital appreciation. 

The fund holds a portfolio of 80 to 120 globally focused stocks with solid dividend histories. Names include tech favorite Apple (Nasdaq: AAPL), bulge-bracket financial Citigroup (NYSE: C), and oiler Royal Dutch Shell (NYSE: RDS.A) (NYSE: RSD.B). The fund is globally diversified, with only around 44% of the it weighted in U.S. stocks. Of the remainder, 43% is spread across Japan, Canada, the U.K. and developed Europe, and the remainder invested in Singapore and other developed markets.

#-ad_banner-#However, one of the most attractive features of IGD is the fund manager’s ability to sell covered call options. As you may know, selling a call against a long stock position is a simple and conservative risk management strategy. This accomplishes a few things for the fund. It generates income, locks in potential capital gains, and lowers the cost basis of its positions. Per the fund’s fact sheet, approximately 49% of the portfolio’s names are covered.

In addition to selling calls against some of the portfolio’s stocks, IGD’s manager also sells calls against stock indices, creating additional premium income as well as hedging the fund against market volatility. The cash flow helps support the fund’s 9.4% dividend yield.

Lastly, one of the first criteria I use in CEF selection is the fund’s price relative to its net asset value (NAV). Is it trading at a discount or a premium? Often, the behavior of the marketplace will misprice CEFs. Apple and Citi, for example are trading at the upper end of their 52-week ranges. But IGD currently trades at a 7.1% discount to its NAV. Eventually those inefficiencies will be corrected, rewarding patient investors with capital gains and high, consistent income.

Risks To Consider: The fund’s ability to write calls against its holdings and broader indices, while a great volatility management tool, can also dampen returns. Selling a call option on a stock can limit upside return. The same is true for index options. However, the tradeoff may be worth it for risk-conscious investors in an uncertain in environment.

On a macro level, although IGD covers a broad scope of the equity spectrum, falling markets can cascade across geographies. As goes America, so goes Europe, then Japan and so forth. Again, IGD’s hedging ability is the best insurance against choppy markets.

Action To Take: IGD’s high-quality equity portfolio, global diversification, and unique hedging strategy make this fund stand out amongst its CEF peers. Shares currently trade around $7.80, a 7.1% discount to NAV, and pay a fat 9.4% dividend yield. Investors seeking a higher level of income and equity exposure at a discount relative to seemingly expensive equity markets should be well served by this under the radar fund.

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