While the investing world continues to shovel money toward exchange-traded funds (ETFs) (full disclosure: I find myself using them more and more), it’s almost as if the grandfather of the ETF, the closed-end fund (CEF), has been reduced to a memory like dial phones or the Nehru jacket. But when I’m at a loss for finding value in an individual stock, I often find myself looking through CEF names like a millennial at a record shop.

#-ad_banner-#CEFs can trace their origins back to the 1860s in Great Britain, when they were primarily used to raise money to build U.S. railroads. The first American CEFs appeared in 1893, 30 years prior to the first U.S. open-end mutual fund. Prior to the Crash of 1929, American CEFs claimed over $4 billion in assets, which was big money for the time.

CEFs have evolved over the decades since, but their organization and basic features have remained relatively consistent. CEFs are and always have been professionally and actively managed, exchange-traded, internally leveraged, and income oriented. Recently, while screening a handful of CEFs, one piqued my interest: Calamos Convertible Opportunities and Income Fund (Nasdaq: CHI).

As the name suggests, most of the fund’s heavy lifting is done through the use of convertible bonds, which are what is known as a hybrid security. Each bond is convertible to a pre-determined number of shares of the issuer’s common stock. This gives an investor two things: an income stream and participation in the movement of the company’s stock. Often, convertible bonds are issued by high-growth companies whose common stock does not pay a dividend.

The fact that the fund is managed by Calamos Investments was the attention grabber. Founded in 1977 by John Calamos, Sr., the firm became one of the investing world’s premier convertible bond managers. I had the pleasure of meeting Mr. Calamos at a conference a few years back.

Knowing the fund was managed by a true authority, I looked under the hood. 37.9% of the fund, naturally, is made up of convertible bonds while 16.4% is convertible preferred stocks. But what really excited me was the sector allocation.

Over 35% of the fund is weighted across information technology and healthcare, represented by disrupters such as Tesla Motors (Nasdaq: TSLA) and Priceline Group (Nasdaq: PCLN). 19.2% covers the consumer discretionary sector with another 20.3% allocated to financials, energy, industrials and utilities. The fund is noticeably underweight in telecom, materials, real estate, and consumer staples.

Debuting in June of 2002 as the bear market of the same year approached its bottom, CHI sports assets of over $1 billion with total internal expenses of 1.25% which is high if you’re comparing to a Vanguard index fund. But keep in mind, Vanguard index funds don’t have dividend yields approaching 11%.

Risks To Consider: Like many CEFs, CHI uses leverage to juice up yields and returns. Currently, the fund’s leverage percentage is at 28.57% which isn’t too terribly out of whack. However, portfolio leverage is like being lent an umbrella when it’s not raining. When the raindrops fall, the lender typically wants it back. Therefore, rising rates are probably the biggest external risk facing the fund. This would create volatility in both the fund’s lower coupon holdings and leverage position. But with the link between convertible bonds and equity markets, rising stocks should help offset this risk.

Action To Take: The unique complexion of CHI offers conservative, income-oriented investors a unique opportunity to gain exposure to the growthiest of growth stocks in a risk-managed package with above-average income. Currently CHI shares trade at around $10.50, which is a 3.5% discount to their net asset value (NAV), with a 10.85% dividend yield that is paid monthly.

Editor’s Note: Since 1926, one collection of stocks has accounted for HALF of the S&P’s return — through every market environment imaginable. If you don’t have this group in your own portfolio, you could be missing out on the single best place to put your money this year and next. Learn which stocks can…