Closed-End Funds Still Scary-Cheap
In the short-term, the Asian CEFs have a lot going for them. Not only are they immune from tax-loss selling, but their large capital gain distributions should attract "dividend capture" interest. We mentioned Korea Fund (KF) last time we spoke. That fund's distribution, announced two weeks ago, turned out to be even larger than predicted, and their discount has narrowed 5% since the announcement.
Any activists making trouble that you're taking advantage of?
We've benefited from activist pressure on a few funds this year and we will soon be tendering our shares of MFS Government (MGF).
We continue to hold our position in Bancroft Convertible (BCV), even though the discount has narrowed considerably. Bancroft management seems willing to fight the activists, but that can all change suddenly. We were surprised at the proposed open-ending of Alliance All Market (AMO). We don't know where the pressure came to do this for a fund that has often traded at a premium. But that's what's wonderful about CEF's: Some die, others are born, and the profit potential remains for active traders and smart investors.
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