Mutual Fund Morning

TIPS Fund Taken to Task for Tactics Flip

 

Closed-end funds issue a fixed number of shares that trade throughout the day on an exchange, like stocks. So when too many investors head for the exit, share prices can fall below the value of a fund's holdings.

Bartlett adds that since the investment change was announced, the fund's discount has widened by 1.5 percentage points.

Karpus has asked the fund to reconsider the changes, or at least open them up to a shareholder vote. "Our primary purpose of owning shares in WIW is the 80% of the fund that must be allocated to U.S. TIPS, which provides for high credit quality and low risk for our conservative investment clients," Bartlett says.

He speculates that Western Asset/Claymore may be changing its investment strategy to differentiate itself from its "sister" fund, the (WIA)Western Asset/Claymore U.S. Treasury Inflation Protected Securities Fund (WIA). The sister fund has assets of $373 million and currently trades at a 10.24% discount to its NAV.

Bartlett believes it would be more appropriate to merge the two funds. By changing WIW's investment strategy, "the trustees can continue to receive two directors' fees, auditors can continue to receive two audit fees, the attorneys can continue to receive two attorney fees, and the New York Stock Exchange can receive two listing fees," the letter said. "All at the expense of shareholders."

Bartlett concedes that the investment change isn't illegal and that litigation on the matter is unlikely.

Western Asset/Claymore did not return calls seeking comment.

You can listen to Bartlett's thoughts on activist investing at this link.

>To order reprints of this article, click here: Reprints

Michael Katz joined TheStreet.com in 2007. Michael has previously worked as a reporter at Forbes and an editor for two custom publishers, SmartMoney Custom Solutions and HNW Inc. He also worked in London as a freelance media reporter and correspondent for Broadcasting & Cable magazine. Michael has a B.A. in English from the University of Virginia.

TheStreet Premium Services

Jim Cramer
Jim Cramer's Action Alerts PLUS:
Trade right alongside a Wall Street pro — enjoy access to his Charitable Trust portfolio and be sent trade alerts BEFORE he makes a move. Learn More
OptionsProfits
OptionsProfits:
Get 50+ trade ideas a week from the industry's top options experts. Plus — exclusive commentary on market trends and essential trading tools. Learn More
Real Money
Real Money:
Our team of professional Wall Street Pros — including Jim Cramer, Doug Kass, and Nicholas Vardy — delivers intelligent analysis, timely trade ideas, and colorful commentary. Learn More
Stocks Under $10
Stocks Under $10:
Break into the market with small- and mid-cap stocks... all $10 or less! David Peltier tells you exactly which low-priced stocks he's buying and selling. Learn More
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
blog comments powered by Disqus
Dow Jones S&P 500 NASDAQ 10-Year Note
12,393.45 1,310.33 2,827.34 15.81
Oil *
101.78
DOWN
26.41
DOWN
2.99
DOWN
10.02
DOWN
0.44
10 Yr
1.58%
SPDR Gold
151.62
-0.21%
-0.23%
-0.35%
-2.71%
Data delayed 20 minutes

Top Stories and Tools

Articles From

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

We respect your privacy.
Podcasts

Connect with TheStreet