If you have been a fan of ESPN's "College Game Day" for the last decade or so, you are used to Lee Corso saying "not so fast my friend."I had this thought as I read my colleague Kevin Baker's
| Not So Fast, My Friend |
First Trust/Aberdeen Emerging Opportunity's price has declined over the past year, but its NAV (XFEOX) has risen.
|Click here for larger image.|
|Source: Yahoo! Finance|
In the mean time, it yields 8%, again trades at a 15% discount and has a hefty 2.07% management fee. I believe the performance of the fund's NAV means that the managers' strategy does capture the desired effect of blending emerging market stocks and bonds. Future results depend on both the managers' ability to stick to this strategy, and whether the discount to NAV stays where it is, gets larger or starts to shrink. Assuming FEO's discount stays where it is or shrinks, I believe the fund offers a good way to get exposure to both emerging-market stocks and bonds. I was not able to find any emerging-market closed-end funds trading at bigger discounts, which leads me to conclude that while FEO's discount may not narrow, it is unlikely to widen.