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Aberdeen Asia-Pacific Income Fu Message Board

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  • axzl axzl Nov 26, 1999 6:50 AM Flag

    Fax at 5 13/16?

    yes. A few months ago the yield from FAX looked
    real high, but since then the market value of many if
    not most closed end funds and reits has declined very
    signifigantly which caused their yields to increase greatly. As
    a long time investor in closed end funds I can tell
    you it hasn't been fun to see the market value of
    these closed end funds decline even though the income
    stream hasn't been affected at all yet.

    Fixed
    income investors have many choices today to buy very
    high yielding closed end funds and reits if they have
    the money to invest. Many reits are yielding 15%+ and
    are selling at large discounts to book value.


    So where is the money going that has been coming out
    of closed end funds and reits? I can only guess that
    more and more people are being enticed away from this
    type of investment to the bright lights in the tech
    sector.

    I suspect that the competition for
    investment dollars flowing into the tech sector will
    continue and those who pick the right stocks will be happy
    and those who don't will lose a signifigant percent
    of that investment.

    Closed end funds and
    reits are trading as though there is bad news on the
    horizon for them. I've looked at my crystal ball and it
    tells me nothing. Maybe someone else has a newer one
    with later technology. I would like to hear from them.

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    • Axzl,without advising me, would you suggest a few
      quality closed end funds worth further investigation for
      a non US citizen.I need to diversify from a heavy
      bias towards oil and gas income funds.
      Thanks in
      advance, W

    • A hold to moderate sell, IMO. Three reasons, 1)
      the dividend policy. Any cut might cause the price to
      drop further. Not to try and frighten you....if you
      look at say PHT...a US non-leveraged, US only fund has
      a current yield of 13.6%. They are earning their
      dividend too. FAX earns only $.48 or 8.34% based on it's
      present price, they are leveraged and foreign(of couse
      that can work for you). To put a "earning" (what they
      earn per share)current yield of 12% on FAX the price
      would have to be $4. Reason 2)The continued flattening
      of the yield curve...short rates climbing faster
      then long rates..on top off all rates going up period.
      Reason 3) Y2K...whether it's hype or not...experts agree
      outside the US is worse than in the US and a good scare
      alone will hit the foreign currency market(no scare
      might cause a good pop too).

      IMO, before I would
      not put any additional money in FAX I would want to
      make sure the Fund has a dividend policy they can
      leave with.

      It's possible they held off buying
      more foreign paper last year because they expected the
      AUD to get stronger, it didn't happen.

      One
      important issue is FAX has great liquitity, many shares
      outstanding. THis in itself will allow FAX to command a
      premium to it's peers.

 
FAX
5.14-0.03(-0.58%)Sep 29 4:01 PMEDT