Investing in a Post-Fidel Cuba

In fact, just 12.56% of the fund's return over the past year has come from an increase in its net asset value. The remainder is attributable to the rise in its share price, which spent the first half of last year at a discount to NAV.

That's an important consideration, given the likely pace of change in Cuba. So far, the transfer of power "has been notably smooth and stable," writes Julia Sweig in the January/February 2007 issue of Foreign Affairs magazine. "Cubans have not revolted ... not one violent episode in Cuban streets, and no massive exodus of refugees. Within Cuba, whether Fidel himself survives for weeks, months, or years is now in many ways beside the point."

But this doesn't deter Herzfeld. "No one should believe, nor do we, that the embargo would be lifted immediately," he acknowledges. "And it should only be lifted if the Cuban government takes steps to restore democracy, freedom and capitalism. That said, however, the single most important development toward that would be the death of Fidel."