Look Here to Invest in Distressed Assets
06/20/08 - 09:55 AM EDT
Richard Widows
"Such investments," the Franklin fund continues, "can be either long or short positions and can utilize a limited amount of leverage. The fund seeks investments in distressed companies, risk arbitrage, securities special situations/undervalued securities."
Nonetheless, the recent top holdings of FMRAX, Weyerhaeuser(WY Quote - Cramer on WY - Stock Picks) and CVS(CVS Quote - Cramer on CVS - Stock Picks), wouldn't seem like horribly distressed companies. The Masters Select Focused Opportunity Fund(MSFOX Quote - Cramer on MSFOX - Stock Picks) states a belief that "limiting the number of holdings improves the long-term return opportunity because the portfolio contains only the sub advisor's highest conviction ideas." MSFOX's continues that it "invests in distressed companies, which involve the purchase of high yield bonds, bank debt or other indebtedness of such companies." Its largest holdings are listed as American Express(AXP Quote - Cramer on AXP - Stock Picks), Salesforce.com(CRM Quote - Cramer on CRM - Stock Picks) and Schlumberger(SLB Quote - Cramer on SLB - Stock Picks), firms not on many current distressed-company rosters. The closed-end Highland Credit Strategies Fund(HCF Quote - Cramer on HCF - Stock Picks) states that it will pursue its objectives by investing primarily in "secured and unsecured floating and fixed rate loans, bonds and other debt obligations, debt obligations of stressed, distressed and bankrupt issuers, structured products, including but not limited to, mortgage-backed and other asset-backed securities and collateralized debt obligations and equities." HFC adds potential geographic diversification by stating that it may invest in securities traded in foreign countries and denominated in foreign currencies." The Pioneer High Income Trust(PHT Quote - Cramer on PHT - Stock Picks) states that it seeks "current income by investing at least 80% of its net assets in high yield -- below investment grade -- debt securities, convertible securities, loans, distressed securities and preferred stocks."| Betting on Distressed Investments | ||||||
| Franklin Mutual Recovery A | Masters Select Focused Oppor Fd | Highland Credit Strategies Fund | Pioneer High Income Trust | |||
| TICKER | FMRAX | MSFOX | HCF | PHT | ||
| TheStreet.com RATINGS GRADE | D- | U | D- | C+ | ||
| TYPE OF FUND | Open End | Open End | Closed End | Closed End | ||
| INIT. OFFERING DATE | 6/2/2003 | 6/30/2006 | 6/26/2006 | 2/25/2002 | ||
| TOTAL NET ASSETS ($MIL) | $226.3 | $119.0 | $621.1 | $428.1 | ||
| MIN. INIT. INVESTMENT | $10,000 | $5,000 | - | - | ||
| ANN'L TOTAL EXPENSE RATIO (%) | 2.45 | 1.26 | 1.00 | 0.67 | ||
| YR.-TO-DATE TOTAL RET'N (%) | -4.00 | -3.92 | -5.18 | 10.64 | ||
| 12-MO. TOTAL RET'N (%) | -13.63 | -5.65 | -20.45 | -5.74 | ||
| Source: TheStreet.com Ratings - Data as of 5/31/2008.
For an explanation of our ratings, click here. | ||||||
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