Here's a look at some of what Don Dion blogged about on RealMoney this week. Topics include a new mutual fund for distressed debt exposure, a Canadian natural gas fund and new FINRA margin rules for leveraged ETFs.
New Mutual Fund Offers Distressed Debt Exposure
Posted 9/4/2009, 1:42 p.m. EDT
On Aug. 31, Martin Whitman's
Third Avenue Management
announced the launch of a new fund called the
Third Avenue Focused Credit Fund
. It has a $2,500 minimum investment and an annual operating fee of 1.71%. The fund, Third Avenue's first new offering in almost eight years, is one to watch as it provides investors with significant exposure to distressed debt.
Distressed debt is loosely defined as the debt of companies that have filed for bankruptcy or are likely to file for bankruptcy.
Traditionally the market for distressed debt has been largely dominated by the hedge fund industry. However, with Third Avenue's newest offering, investors have the same opportunity to expose themselves to the risky holdings in mutual fund form. Interestingly, the fact that this instrument is a mutual fund rather than a hedge fund also means investors are given a higher level of protection and complete liquidity.
The strategy behind TFCVX harkens back to Whitman's investment style, which involves looking for undervalued assets. The ratings issued to the fund's underlying holdings span the spectrum from AAA to unrated. Third Avenue Focused Credit invests in below-investment-grade credits including junk bonds, bank loans and convertible bonds or preferred stock in hopes of finding big returns.
GAS: UNG's Canadian Cousin
Posted 9/2/2009, 6:15 a.m. EDT
I've warned time and time again that the
U.S. Natural Gas
is an awful way to gain exposure to the commodity and, as I predicted, the fund has been spiraling ever since. At last check, the fund is now trading at a nearly 18% premium.