at a large discount because it is generating poor earnings. Two other closed end funds selling at large discounts but with better earnings than KBA are MMT and KMM. If you look closely at the company that manages KBA you may find that their management fee is based on NAV and not market value which is true of KMM which is managed by Scudder. The companies managing these closed end funds are primarily concerned with generating income for themselves through the fees they charge to the fund for management. One way shareholders can take advantage of large discounts to NAV is to force the BOD of the managing company to convert the closed end fund to an open end fund which brings the market value up to the NAV immediately.
A few year ago I became involved with a fund selling at a 18-19% discount and a battle with management on what they were doing about the discount(Salomon fund). I just happen to own it and was not for it opening the fund. BUt I found out some interesting things in the process. When a closed end fund buys it's own shares back at a discount and retires them the difference between the purchase price and the NAV is ADDED as a profit back to the fund.
So certainly it makes a hell of a lot of sense for funds like KBA to buy some it's own shares back, praticually with boat load sof bonds maturing...but what will they do, buy more bonds instead 5% of make the shareholders 18% by buying in open market shares. Tsk, Tsk.