Go Global: Four Fund Favorites
05/31/2016 10:00 am EST
Closed-end funds are a cheaper alternative to other types of investment funds, which still provide exposure to all of the same markets as their more expensive and less profitable peers, explains Briton Ryle, editor of The Wealth Advisory.
Alpine Global Premier Property (AWP) gives us exposure to both of the two biggest real estate markets on each of their respective continents — those of the US and Brazil.
These two countries account for 49% of the fund’s $763 million in assets. However, its single-biggest holding is a real estate investment company from Singapore.
Three-year average discount to NAV is 11.13%; the current discount to NAV is 18.54%. As such, the shares are unusually cheap.
I continue to rate the Alpine Global Premier Property Fund a “buy” with a 12-month price target to $8.50.
The BlackRock Global Opportunities Fund (BOE) is a leveraged fund. The portfolio manager sells individual stock options on the fund’s holdings in order to generate income. Currently, about 50% of the fund’s holdings are leveraged.
While this may sound like a risky strategy, what we’re really talking about is selling covered calls (which are “covered” by the fund’s holdings) or selling puts (which merely results in advantageous entry points in a worst-case scenario).
The current dividend yield is 10.51% ($1.20 per share) while the current discount to NAV is 13.51%. I still rate this fund a “buy” under $15 with 12-month target of $18 a share.
The GAMCO Global Gold, Natural Resources & Income Trust (GGN) is a closed-end gold fund run by Mario Gabelli’s Gabelli Funds Company.
It’s a leveraged fund, which means it trades derivatives to generate income, which it then distributes as a very nice dividend; by derivatives, we are mostly talking about covered calls on stocks it owns.
Meanwhile, having a little exposure to gold in your portfolio is never a bad thing — diversification into several asset classes tends to reduce volatility and overall risk.
Gold miners in general are irresistibly cheap and I rate this fund a “strong buy” under $7.50 a share.
Mexico is still one of the best emerging markets for investment and we continue to recommend the Mexico Fund (MXF).
Its proximity to the US puts it in a strong position, and its government, anxious to stimulate economic growth, is rapidly building relationships with American companies. Because of this, the US takes in 78% of Mexico’s exports.
The three-year average discount to NAV is 1.64%; now trading at a discount of 11%, the shares are unusually cheap. The Mexico Fund, yielding 9%, is a “buy” under $20 with a 12-month price target of $30.
By Briton Ryle, Editor of The Wealth Advisory
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