All the closed end funds got thrown out with the bathwater last week. I am a shareholder of SRO. Last week SRO was the poster child of how low a closed end fund could go. On Friday, the top ten holdings, which represent 70% of the fund, went up anywhere from 6 to 30%, yet the fund dropped 35% ! Today, SRO is up 50%. Truly, the vultures and bargain hunters have moved into the closed end fund arena. There is some deep value in closed end funds right now, and this has not been lost to value investors.
I wasn't familiar with that fund, MFD, but it seems to be a first debt bond fund that has gotten beaten down pretty badly. I own CHY, which is corporate bonds and convertibles and it has been walked down every day.
You only have to look at the executives of AIG to realize what is wrong. Not only did they destroy a great company, but had the sheer audacity to spend almost half a million bucks of government bailout money on massages.
Why did they do this? They know that nothing will be done to them for spending the taxpayers money foolishly. Yet the little people, who are really the innocents, i.e. the middle class, will truly be the ones who have to pay for this financial mess we have today.
Investors, Hedge funds, and other investment houses have been tossing closed end funds into the fire regardless of components. Why? They need to raise cash for redemptions. A closed end fund cannot be broken into, such as an open end fund. IGR now has a level distribution policy. The $540 million in cash can be used for good of the shareholders.
My use of the cash would be to buy back shares. Less shares on the market mean more dough for rest of the shareholders. Remember, the reits are still going to send thier dividends regardless of how many shares on the market. Another possibility would be that the fund can pickup some depressed real estate or debt instruments.