A new IPO hits the market today -- one that isn't wowing investors with unmanned aircraft or Chinese Internet aspirations. Alpine Total Dynamic Dividend Fund (NYSE:AOD) is a closed-end fund, but it's a big one. The fund raised more than $3.5 billion in its IPO by selling 176 million shares at $20 a pop.

Before we sing the fund's praises, however, let's delve into the one fatal flaw of buying a closed-end fund as an IPO. Crack open your issue of Barron's over the weekend or log on to Morningstar (NASDAQ:MORN), and you will find a ton of closed-end funds that trade at a discount to their net asset value (NAV).

Yes, more than a few of these funds trade at a premium to their assets, but I am usually an advocate of waiting for good funds that fall to a discount. Who here wouldn't mind paying $0.87 for a buck? If you're going to pay a premium to NAV, you may as well find a similar ETF or a conventional mutual fund that you can buy at NAV.

In this case, the same fund family has the Alpine Dynamic Dividend Fund (FUND:ADVDX), with a similar approach to aggressive income-enhancing returns. One difference is that the new closed-end fund offers the advantage of having a fixed number of shares. The ability to leverage up to a third of its assets to chase higher yields is also tempting.

However, let's get back to the problem with buying freshly minted closed-end funds. Investors are paying $20 a share, but they're really only buying $19.06 in assets after all of the IPO expenses are skimmed out. So right out of the gate, the fund trades at a 5% premium to its NAV.

Mutual fund fans may also grimace at the prospectus illustrating annual fund expenses of a whopping 5.03%. However, that is how it would be if the fund took advantage of leveraging a third of its assets, where that interest overhead alone would be 3.18%. Still, even in its non-leveraged state, it's usually pretty hard to justify buying into an income-oriented fund with an annual expense ratio of much greater than 1%.

To be fair, Alpine's original fund has been a scorcher. It has been one of the top dogs in its category over the past three years. It yielded better than 13% last year. How does it achieve such high income distributions? Well, it's through a practice known as dividend capture. You've heard of companies such as Microsoft (NASDAQ:MSFT), Iomega (NYSE:IOM), and Ashland (NYSE:ASH) declaring beefy one-time dividends, right? Alpine steps up and buys in before the disbursement. It then holds on for two months to make sure that the payout qualifies for the tax-advantaged 15% dividend tax rate.

There is no free lunch, of course. A stock drops by the amount of the dividend as it goes out. Still, Alpine has been pretty good at playing this game as well as picking up other compelling stocks for the sake of capital appreciation. As impressive as the original Alpine Dynamic Dividend Fund has been when it comes to niche-popping yields, it has actually managed to produce nearly 22% in annualized returns since its debut in the fall of 2003.

And I couldn't knock the new fund's premium without pointing out that Alpine rolled out another closed-end fund six months ago, and it has not fallen to a discount. Alpine Global Dynamic Dividend Fund (NYSE:AGD) trades at a 3% premium, and it never traded below its $20 IPO price.

So I'll be watching how the new closed-end fund pans out, but I have no intention of chasing it. Instead, maybe I'll spend the weekend kicking the tires of some of the other open-end Alpine funds. Or, better yet, I'll check in with the Motley Fool Champion Funds newsletter service to see what fund guru Shannon Zimmerman likes these days.

Longtime Fool contributor Rick Munarriz prefers stocks over mutual funds, but old habits die hard -- he always seems to have a fund or two in his portfolio. At the moment, it's Oakmark's international small-cap fund and Greenspring. He doesn't own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. Microsoft is an Inside Value recommendation. The Fool has a disclosure policy.