I would like to offer an apology to yanisbagman and Wright. I'm not quite sure what happened here tonight but I responded to yanisbagman based on only one of his/her posts ( 1 saw one from yanisbagman and one from wright tonight). After I posted my response to yanisbagman I checked to see if my note was posted. It was and all of a sudden I'm seeing that there are many,many notes on this subject that I wasn't aware of.
I'd just like to make it clear that my post was based on only the very last notes that you posted.and I'm guessing that I'll be asking Yahoo why this happened. I'm looking forward to reading your earlier notes and sorry if I was out of line based on any of your earlier exchanges that I wasn't aware of. For full disclosure, I should add that I haven't logged into my Yahoo account for several years until a day or two ago. Perhaps they hobbled me for security reasons.
I'd just like to close by saying that I'm looking forward to reading your earlier posts on IAF, and I'm sorry if my earlier response contradicts some of the details in your earlier posts.
I wasn't sure who to respond to first about IAF, but I picked yanisbagman (only because it was the last post I read).
If anyone expects any CEF (close end fund) to be able to pay the full distributions that often run in the 8-10% per year range without ever having to cover some of the distribution without some ROC (return of capital), I think their expectations are probably a bit too high. There are some very serious challenges for IAF, as yanisbagman says, but I guess I would only agree with yanisbagman's first sentence if he/she is suggesting that for the distribution fund to "work", that means that the CEF fund needs to consistently deliver their distributions all of the time (not just during extended bull runs) without relying on ROC some of the time. That just doesn't happen if you look over a long enough period of time. As far as the price falling below NAV, that's due to buyer sentiment, CEF's seem to be out of favor now perhaps due in part due to the relatively low CEF managed distributions of 8-10% compared to the 20-30% gains in stocks and mutual funds during 2013.
There is no question that IAF does have some serious challenges and I'm thinking that the avoid recommendation referred to in the earlier post may have amplified the drop in price.
P.S. I no longer usually post to Yahoo message boards (this is my first post in 5 years or more) as it was my general belief that most messages were from longs looking to increase stock price or (mostly) shorts looking to get the stock price to drop dramatically. I sincerely believe that if there were a ton of people following IAF on this message board, the earlier posts might be intended to extend the selling pressure on IAF to get the price lower. However, if there is anyone (including yanisbagman and wright(?)) that is interested in having a sincere discussion about this fund (or other CEF's that I'm interested in) I welcome any communication.
The 10 year mining rampup has come to an end. After Exxon completes construction of its floating nat gas processing plant, it will be moved to Aust western coast. This will begin the nat gas development /production ramp up. You should research Exxon's activities in this region.
Sentiment: Strong Buy
These "distribution" funds only work during extended bull runs. A lot of the stock "cefs" were great during the 90's but the severe corrections of the first decade of the 2000's killed them. Iaf needs a long recovery on materials demand, the whole China/Australia cycle to rev up again. I did buy some Iaf in December at $8.44, sold in January at $8.96. Watching it again but in no hurry.
Well, this is certainly something I think the market has recognized over the years. Virtually no gain in NAV coupled with paying distributions out of paid in capital begins to make me wonder why I am holding onto this fund. If the Aussie market takes off the shares might move back to the 10 range but I do not see a lot of growth here. Perhaps the managers should consider distributions differently and more in line with actual gains in the funds holdings.
IAF has almost consistently traded 15-20% above NAV and seldom gone down to the NAV so that is why this is such a shock. Hopefully, a floor is being put in place to allow for gains in the future.
The price right now is about equal to NAV. Did you buy your shares at a premium to NAV? Since Australia in general and minerals (BHP) in particular have struggled, the market has chosen to eliminate the premium. I think Australia will have to get "hot" again to see this go back to $10 or so. JMHO.
Oh, I have, but a fund that represents 50 top companies and banks and insurance firms which do business worldwide still seems like a decent diversification.
But this is getting hard to take. This was a pretty decent chunk of my IRA and it will take about a 20% recovery to get back to break even although the dividends will help some.
Also, in 2008 EWA (the etf) was 33 and is now 23. The Aussie market got clobbered falling over 40%. In 2002 IAF was 5 and is now 8.60 which is about a 6% return per year not counting the 9% distribution policy. If you got burned by buying too high I am sorry but you need more than anger to convince me it is a Ponzi scheme. Why don't you complain to the SEC?
On June 30, 2008, shares in all markets were going nuts. IAF has been as high as 18 and as low as 4. This last quarter too much of the distribution came from paid in capital but other times the whole distribution has been from capital gains and dividends. Not a Ponzi scheme but also not as well as I would like it to perform.
June 30, 2008 the stock price was 15.44. Now it is $8+. I wonder where all the dividend money came from. Can you spell PONZI? Sorry, if you can't understand that they're paying investors with their own money and calling if a high dividend rate then you might not understand "PONZI". Please google it and try to understand what is happening.
Oz dollar drop vs the U.S. dollar has been stunning and some say it has farther to fall. I have been expecting this rise in unemployment as many projects were being cancelled and some were huge even in the mining sector. Ironically, the jobs added number was greater than expected last week when data was released.
WSJ had more bad Aussie news this morning. Aussie dollar down to .89 U.S. New hogh unemployment rate to 5.85%. Only mining sector doing well. Looks like blood in the streets to me. Ed
This does not mean they will continue to pay the 25 cents per quarter that they have been paying. Depending on what happens to the share price, the 9% policy can mean a smaller or larger dividend and right now the dividend would drop to about 20 cents per quarter IF the price stayed in this range for several months. I rather expect a small decrease to about 23-24 cents for the next payout.
BHP and QBE make up about 16% of the total portfolio for IAF so their bad news would have some repercussions. But Colleen's assertion that EWA is more weighted to financials is bothersome as 37% of IAF is weighted to the same category. Not sure her statement can explain the depth of the decline in IAF although it does yield some light on the matter. Hopefully we will see a rebound come the new year.