This should, in theory, prevent discounts or premiums to the fund's net asset value.
Buy Korea investors pay no initial fees and sales charges, only annual management fees equal to 2.95% of the fund's net asset value.
For what it's worth, the fund claims a net asset value of 9 Swiss francs a share, a number that hasn't budged much since its inception in February 1996.
This has two drawbacks: a fund's net-asset value is quoted and so investors can buy or sell only once a day.
The only sure way to drive a closed-end fund closer to its net asset value is to attract a raider who tries to force management changes or a liquidation.
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The fund has a good track record of out-performing its net asset value return in strong market years and fund management has been a consistent buyer of shares (currently holding around a third of all shares outstanding).
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If you choose a closed-end fund trading at a discount to its net asset value, you might also get some capital appreciation, says Maury Fertig, chief investment officer at Relative Value Partners LLC, Northbrook, Ill.
In 2007 the fund traded at a 50% premium to net asset value, in part due to their high distribution yield at the time.
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As a result of some unfortunate decisions, his Fidelity fund is now trading about 4% below its net asset value.
The litigation shows that PIPE Equity Partners has written down its stakes in an NIR Group fund down to 30% of the last reported net asset value.
Other possible improvements include dividend reinvestments that allow ETF shareholders to reinvest dividends in new shares at net asset value, just like a traditional fund, as opposed to an intraday price that could be above (or below) the NAV.
Another closed-end fund, it trades at a 13% discount to net asset value and has an expense ratio of 1.7%.
And note that the Invesco fund trades at a 15.6% discount to net asset value, taking some of the sting out of its higher expenses.
By contrast, with a traditional index mutual fund, "you're always buying at the net asset value, " Mr. Goldie notes.
However, the fund charges an annual management fee o.5% of Net Share Value payable monthly in order to provide the sophisticated security and wallet management that one would expect with such large amounts at stake.
The fund currently trades at an approximate 20% discount to the underlying net asset value of its portfolio.
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Fund managers involved in the talks say that the reduction in the net present value of the bonds may be much higher than that suggested by a 50% reduction in their face value: the true figure could be closer to 70%.
"If you wanted to get out on that day, you could only do it at a discount to net asset value, " says Sonya Morris, an analyst with fund tracker Morningstar.
Buy the fund and you are buying YPF even cheaper since the fund trades on the New York Stock Exchange at a 29% discount to net asset value.
In Watt's Latin America Equity fund, for example, you are getting shares of YPF, an integrated oil company in Argentina that trades at 6.5 times estimated cash flow (expected 1998 earnings plus depreciation). (The comparable ratio for Exxon is about twice that.) Buy the fund and you are buying YPF even cheaper, since the fund trades on the New York Stock Exchange at a 29% discount to net asset value.
Net asset value (NAV) is the worth of the basket of assets the fund is designed to track.
Following a prominent fund's "breaking of the buck"--that is, a decline in its net asset value below par--in September, investors began to withdraw funds in large amounts from money market mutual funds that invest in private instruments such as commercial paper and certificates of deposit.
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