Closed End Funds

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Closed-End funds are similar to mutual funds except that they are closed to new investors.

In a Closed-End fund a fixed number shares are issued when the fund is formed and then the fund is closed to any new additional investors. But that does not mean a new investor cannot buy a Closed-End fund unit in the market. The units
of the Closed-End fund trade in the market where one can buy them. The units will trade either at a discount from its Net Asset Value (NAV) or at a premium to NAV.

A mutual fund is open-ended meaning new investors are accepted anytime and existing investors can redeem their units at any time and exit the fund.The fund basically issues new shares when more investors are attracted to the fund.

There are many closed-funds in the market to invest overseas. Some of them are listed below:

1. The Chile Fund – CH
This fund has assets of $233.0 Mil and is now trading at a premium to NAV.Most of the major Chilean stocks are in this fund. If you are looking for exposure to Chile, this fund is an easy way to accomplish that.

2. The Central Europe and Russia Fund – CEE
This one has $871M in assets and is trading at a discount now.As the name suggest it invests in the former communist bloc countries and Russia.

3.The New Ireland Fund – IRL
This fund is trading at a discount to NAV of about 11%. If you believe in the recovery of the Irish markets, you can pick up a few units of this fund.

Cheers!
-David

Invest (some) in International Real Estate !!!!

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Invest a portion of your portfolio in Global real estate. This may sound really silly considering the “sub-prime” crisis that is going on now in the US. But remember this is a problem mainly affecting the US.Agree that it has international impact since many financial institutions have invested in the derivative securities such as CDOs in the US. However this affects only those institutions and not the local real estate in each country. Thats why it makes sense to grab a few foreign real estate stocks while they are cheap now. How much you need to invest depends on your portfolio size and risk tolerance. Anything like 2-5% of your portfolio should be enough.

Real estate has always been a part of long-term investor’s portfolio because they provide diversification and also boost the portfolio’s yield with their high dividends.

The “sub-prime” mortgage crisis is uniquely an American situation. Unlike the US, it is not that easy for anyone to get a mortgage loan in many countries. In Germany, UK etc. one has provide all kinds of documentation and wait at least a month or two before a loan is approved. Banks in those countries actually verify all the details provided by the applicant.Ninja (No Income No Job or Assets) loans are unthinkable in those countries. Similarly in countries like Singapore, Malaysia, India, Brazil etc. it is difficult to get a mortgage easily even when the applicant qualifies. Its true that UK is affected more than any other European country by this sub-prime crisis, but that is because in UK a few “bad apple” institutions gave loans to people who cannot afford a big loan.

Another factor that supports the argument for investing in international real estate stocks is that the real estate market is holding up well in many countries such as the UK,Singapore, Malaysia etc. In UK for example, the London property prices has hardly fallen more than 2% due to high demand for housing in the city.UK’s strict land preservation laws also contribute to the supply of new dwellings since developers cannot acquire huge tracts of land for development.
In Singapore, though the property market is red hot the government there has announced recently that it will not interfere or take actions to cool it down.Being a small island nation, there is always a high demand for housing especially in sought after areas. Same is true in Malaysia as well. Cities like Kuala Lumpur, Singapore are dotted with sky high cranes building the next apartment tower.

India and China are a different story. Property prices in both the countries have gone through the past few years particularly in major cities with many speculators playing the market.

With that introduction about property markets in a few countries, let’s look at a few options to invest in foreign countries. There are many choices available to US investors. Some of them are listed below:

a. ETFs:
1. SPDR DJ Wilshire International Real Estate ETF – RWX

This has assets of over $1.1B and gives a yield of 3.27%. Has some 6.2% of portfolio in Singapore, 21% in Australia, 7% in Canada and many other countries.

2. WisdomTree International Real Estate Fund – DRW
This is a small fund with $52M in assets and has an yield of 4.06%.

b.Mutual Funds
1. ING Global Real Estate Fund – IGLAX
2. Fidelity Internation Real Estate Fund – FIREX
3. Cohen International Realy – IRFAX

and many more.

-David

Ireland – “The sick man of Europe?”

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Whats up with the Emerald Isle this year?. Ireland seems to be going thru some tough economic difficulties based on the Irish Stock market or the Irish stocks trading in the US stock exchanges.

The European media says that Ireland is having a big boom in terms of industrial activity. New building are under-construction all over the place and that Ireland is gonna be the major cultural,tourist capital of the EU in the coming years. This seems to contradict with the way Irish stocks have been performing this year.

The two Irish banks (IRE, AIB) are in the negative territory year to date and so is the closed end fund “The New Ireland FD” (IRL). The Bank of New York ADR Index for Ireland is down -17.28% YTD. Interesting to see that the Germany index is up a cool 26.88%. Another high-flying Irish stock that was brought back to Earth at a sustainable PE ratio is the C&C; beverage group.

Both the Irish banks and the closed end fund pay good dividends. Since these stocks have been beaten up with the rest of the banks, it may be a good time to review these and pick up a few for the long-term.

Lets have the “Luck of the Irish” soon

-David

Singapore – Your next investment destination !!

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Above are some of the pictures of the tiny city state of Singapore in Asia. It is a hot destination for international capital now and has a very good business friendly environment. We will discuss this Asian marvel in another blog soon.

Photos:
#1. & 2: Singapore Harbor – One of the busiest in the world. Situated strategically on the way between Japan,China and the Middle East,Asia,Europe thousands of ships pass thru this harbor each year.

#3&4:Construction near downtown for a multi billion $ casino and entertainment complex. Singapore recently legalized gambling and this project is the first to take advantage of the law.When opened sometime in the next few this development will bring more tourists and their $ to Singapore. Most of the land for this project is reclaimed land from the sea.

#5: View of Singapore downtown and the Merlion statue. This Merlion is a very famous tourist symbol of Singapore.In this picture, the building with the yellow sign at the top of it is the “May Bank”. This is a huge banking group operating in Singapore,Malaysia and other Asian countries.
Singapore hosts pretty much all the top banks of the world like Standarad Chartered,Citibank, Bank of America, Barclays, BNP Paribas, ING etc.

-David