Readers Find a Way to Play the Old Sod
Back to the Global Portfolio mailbag, this week with a Euroland twist.
Several readers brought to my attention that, contrary to what I wrote, there is, in fact, an Ireland-only mutual-fund play. While there are no open-end funds, the closed-end (IRL) Irish Investment Fund invests at least 65% of its assets in Irish companies with the remainder in non-Irish companies that are affected by events in Ireland. Its largest holding is Allied Irish Banks (AIB). The fund's price has declined 3.6% this year, but it has risen 11% since a late-May low. Its performance in 1999 was a dismal minus 17%, but it had strong performances in 1997 and 1998, when it rose 34% and 20% respectively.
Currently the fund is trading at a steep 28.1% discount, meaning that the share price is that amount less than the net asset value of the fund divided by the total number of shares. Closed-end funds are baskets of stocks like other mutual funds, but trade on exchanges like individual stocks. Although the price of each share should equal the net asset value divided by the total number of shares, often the price will vary. When a discount on a closed-end fund is greater than 15% to 20%, many analysts think it represents a bargain because the price will eventually head back to parity with net asset value. Indeed, sometimes the fund managers will buy back shares to force it back towards its net asset value.Many thanks to those readers who brought this fund to my attention.
Euro TroubleCertainly one of the factors affecting Ireland and its investments has been the declining euro, which reached an all-time
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