Dull Holding's Performance Sparkles

As of its last report on Sept. 30, the fund was more moderately positioned, with many European large-cap stocks such as ENI (E - commentary - Cramer's Take) and Enel (EN - commentary - Cramer's Take). Although the fund is now a little lighter on emerging-market equities, it does have 4.3% of its assets in Latin America and 2.2% in Africa/Middle East. I'm glad to see that even if the fund's managers aren't favorably disposed to emerging markets right now, they haven't given up entirely; zero exposure to an area they expect to invest in would be a big bet.

Another component of the fund is its yield. World Dividend & Income has been paying 0.1167 cent per share per month, which puts the yield at 6.38%. Remember that the fund is leveraged with the borrowed capital being invested in currency products. That means it could be susceptible to some sort of emerging-market currency crisis, although the last spring's correction did start in the currency market and the fund wasn't terribly hurt.

World Dividend & Income has traded at a discount to its net asset value for the vast majority of its listed life. Funds like this more often than not will like trade at a discount. The slight erosion in the discount over the last few months might be due to demand for products that offer lower-beta, higher-yielding returns. As the market moves closer to its next 10% correction, there may be even more demand for this type of fund.

Eroded Discount It may accelerate as demand for this fund's qualities increase

Source: ETFConnect

From a slightly broader perspective, a diversified portfolio should have some exposure to stocks or funds with World Dividend & Income's attributes, a high yield and low volatility. Your own opinion about what the market is likely to do in the near term probably will determine how much you have in relatively dull holdings such as World Dividend & Income vs. higher-octane names.

---

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Lazard World Dividend & Income Fund to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

---

At the time of publication, Nusbaum was long Verizon and iShares MSCI EAFE Index Fund for client accounts, although positions may change at any time.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, Ariz., and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.