Hide Article Text (OCR)
Sometimes different can be better. Investors bored with conventional stock mutual funds and willing to do a little homework can spice up their portfolios with the hybrid known as a closed-end fund. It can emphasize a specific coun try, region or investment strategy. Last year, the average closed-end fund had a total return of more than 21 percent, boosted mostly by emerging markets. Returns have been a bit choppier this year because of overseas volatility, but the poten tial remains. Investors are catching on. The number of closed-end funds has grown to more than 500 with assets of nearly $140 billion from 54 with $7 billion in assets in 1985. **Closed-end funds offer the only way for the average investor to play some emerging markets,’’ said Col in Matthews, closed-end fund ana lyst with Morningstar’s investment advisory. ‘“The high returns of 1993 show that you can’t ignore closed end funds or you'll miss out on those sorts of periods.’ Unlike a conventional open-end mutual fund that issues unlimited amounts of shares and redeems them on demand, a closed-end fund issues only a fixed number of shares at an initial public offering. These shares are then traded on the New York, American or NASDAQ ex changes just like any public compa ny. Shares are bought through a stockbroker and regular brokerage commission charges must be paid. An advantage of a closed-end fund is that it often permits investors to buy assets for less than their true value. That’s because the fund’s share price on the exchange will fluctuate and differ from the net as set value (NAV) of all the securities in its portfolio. A fund that’s selling for a stock price higher than its NAV is trading at a premium, while a fund selling for a price lower than its NAV is trading at a discount. “It’s easy for the average investor to be impressed with closed-end funds investing in emerging mar kets, but you've really got to check the net asset value for the premium you'll be paying,’’ advised David Schachter, vice president with Thomas J. Herzfeld Associates which tracks closed-end funds ‘While emerging markets funds were selling at substantial discounts in 1990, the really hot markets now have premiums as high as 20 per cent.”” Because of those high premiums, a domestic equity fund selling at a discount may be a better deal in the long run than an emerging market fund, Schachter believes. Managing a closed-end fund is different from an open-end mutual fund because of its stable pool of as sets. ‘‘A plus of a closed-end fund is that it makes a long-term strategy possible because investors aren't constantly taking their money away,’’ said William Gedale, presi dent of General American Investors, established in 1927 to rank as the nation’s oldest closed-end fund. Some attractively priced closed end funds include: General Ameri can Investors, HQ Healthcare In vestors, Jundt Growth Fund, Latin American Discovery, Emerging Mexico, Salomon Brothers Fund, Tri-Continental Corp., MFS Charter Income and New Germany Fund . Some intriguing overseas choices carry significant premiums, among them Templeton China World Fund and Asia Pacific Fund. By ANDREW LECKEY Leckey is a syn cates st fo r edi
Newspaper Details
Centralia Chronicle
Centralia, Washington, US
Sat, Feb 26, 1994
Page 9
Full Page
Clipped by
David S.
USA 16 Jun 2026
Other Publications Near Centralia, Washington
Centralia Daily Chronicle Examiner
Centralia Daily Chronicle
Centralia News Examiner
Centralia Weekly Chronicle
Centralia Chronicle Advertiser
