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May 25, 2012
Mark Clayton: Is Hillary's State Dept. hacking Al Qaeda? Not quite
Erika Bolstad: Temple cancels Wasserman Schultz speech
The Kosher Gourmet by Ethel G. Hofman: The former president of the International Association of Culinary Professionals, whose members included the likes of Julia Child, is back with contemporary Shavous cuisine: Ruby Fruit Soup, Sweet Noodle Kugel with Cheese, Key Lime Curd, Calsone Casserole Frittata with Wild Mushrooms, Sun-dried tomatoes and Olives, Baked Tilapia with Pepper Cheese Cream and Brown Sugar Shortbread
May 24, 2012
Jeff Jacoby: The peace process battered Israel's reputation
Michael Muskal: 'Pro-choice' position hits record low, according to poll
Chris Farrell: Are We in a Tech Bubble?
The Kosher Gourmet by Penelope Wall: PHILLY CHEESE STEAKS --- hold the steak!
May 23, 2012
Tony Pugh: More private colleges offering tuition discounts
Mary Beth Franklin: How to Choose the Right Annuity for You
Tina Susman: The wig wasn't enough: Man gets 13 years for posing as his dead mom
The Kosher Gourmet by Emma Christensen:A simple way to do fish right
May 22, 2012
Warren Richey: Can US group challenge overseas surveillance act? Supreme Court to decide
Thomas M. Anderson: Walking Away From a Mortgage
The Kosher Gourmet by Megan Gordon: Enjoy a celebration of the most rich and layered flavors: Black bean, sweet potato and quinoa chili
May 21, 2012
Mark Clayton: Cybersecurity: How US utilities passed up chance to protect their networks
Howard LaFranchi: NATO summit: Who will foot the bill for long-term Afghanistan security?
Chris Farrell : Earn Dividends in Emerging Markets with This WisdomTree ETF
Stephen Whiteside, Ph.D. : Mayo Clinic Medical Edge: Social anxiety disorder --- or just shy?
Guy Jackson : Victim's father regrets death of Lockerbie bomber
The Kosher Gourmet by Mario Batali: Famed chef's veal shoulder farsumagru: A festive meat course for late spring
May 18, 2012
Rabbi Berel Wein: Striving: The People of the Book's Book for (All of) the People
Steven Goldberg: 5 Great Stock Picks and the Exchange-Traded Fund that Owns Them
Mary Pickett, M.D.: Ask the Harvard Experts: Don't be forced into gluten-free lifestyle based merely on a doctor's false-positive test
The Kosher Gourmet by Carolyn Malcoun: DIY healthy lunchbox treats: HOMEMADE FRUIT BARS for kids and brown-bagging adults alike
May 17, 2012
Warren Richey: Teacher fired for being unwed and pregnant can sue religious school, court rules
Josh Mitnick: Netanyahu's 'centrist' coalition is already proving it's anything but
Steven Goldberg: Earn Dividends in Emerging Markets with This WisdomTree ETF
Amina Khan: Research links coffee to lower death rates
The Kosher Gourmet by Faith Duran : Cheesy Potato Breakfast Casserole with Cheddar and Sun-Dried Tomatoes
May 16, 2012
Carmen Terzic, M.D., Ph.D. : Mayo Clinic Medical Edge: A variety of exercises can help improve balance
Melissa Healy: National strategy on Alzheimer's disease aims to halt it by 2025
The Kosher Gourmet by Joyce White : GOODNESS GRACIOUS: GREENS! 4 winning recipes that are no longer just for down-home folks (Includes expert tips & techniques)
May 15, 2012
Kristen Chick: Obama administration resumes arms sales to Bahrain despite serious unresolved human rights issues. Activists feel abandoned
Pat Mertz Esswein: Homes are now affordable again and mortgage rates are low. What you need to know before you buy
Kathy Kristof: Our Practical Investor Fights Inflation with These 6 Investments
Sue Hubbard, M.D.: The Kid's Doctor: Lactose intolerant young child? Check again
The Kosher Gourmet by Kathy Hunt: Spread a Little Excitement with EXOTIC CONDIMENTS (4 RECIPES)
May 14, 2012
Lisa Gerstner: How to Protect Your Identity, Finances If You Lose Your Phone
Harvard Health Letters: Heart disease and dementia
The Kosher Gourmet by Megan Gordon: MANGO COCONUT OAT MORNING MUFFINS are a bright but hearty delight
May 11, 2012
Jessica L. Anderson: Get the Best Deal on a Used Car
Jett Stone: Forget face-lifts and fake knees. Scientists have seen the fountain of youth --- and it's broccoli
The Kosher Gourmet by Chef Mario Batali: The famed chef's vegetable dish that tastes true to the season: FAVAS AND SUGAR SNAP PEAS WITH POTATOES AND TARRAGON
May 10, 2012
Sergei L. Loiko: Putin sends warning to U.S., NATO in Victory Day speech at Red Square
Mary Rourke: How being a 'mentch' got Vidal Sasoon his start and fighting in Israel's War of Independence provided him with confidence and a strong sense of his own identity
Jeff Bertolucci: Get Home Phone Service for Less Than $10 a Month
The Kosher Gourmet by Betty Rosbottom: Gleaming with its golden, crimson, and snowy white hues, this silken smooth and creamy STRAWBERRY ORANGE TRIFLE looks impressive, but is easy to prepare
May 9, 2012
Sharon Palmer, R.D. How you can reduce your risk -- or delay -- chronic diseases associated with aging
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Jewish World Review
An Investing Guide to Closed-End Funds
By
Rachel Koning Beals
Despite the name, closed-end funds behave more like individual stocks
JewishWorldReview.com | (USNWR)
Closed-end funds (CEFs) may be one of the most misunderstood investments.
CEFs are called funds, but they really behave more like individual stocks. Unlike individual equities, they may involve a bit more math to determine an attractive entry point. There's a benefit in the difficulty, perhaps. Curious investors are forced to do their homework. And considering the volatility of certain CEFs, a little extra studying is a good thing.
For the mostly higher-net-worth, higher-risk-profile investors that are the target audience for closed-end funds, these investments provide potential reach that tops other funds. Because a closed-end fund does not need to maintain cash reserves or sell securities to meet redemptions, the fund manager has the flexibility to invest in less-liquid securities. A CEF may invest in securities of very small companies, thinly traded municipal bonds, or securities originating in countries that can't be accessed by traditional means because they don't yet have fully developed public markets.
Of course, added volatility can come with that flexibility. Unlike regular stocks, closed-end fund holdings often represent an interest in a specialized portfolio of securities that is actively managed and typically concentrated in a specific industry, geographic market, or sector. The cost of the transaction for a CEF is similar to the cost of a stock trade. There are also internal management fees paid to the fund company.
Decade of growth. An estimated 2.1 million U.S. households owned closed-end funds in 2010, according to the Investment Company Institute. These households included mostly retired, higher-income, experienced investors that owned a range of equity and fixed-income investments.
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Bonds account for more than half of all closed-end fund assets, according to ICI. However, assets in equity closed-end funds grew from 26 percent a decade ago to 42 percent of all closed-end fund assets at the end of 2010, the latest data available.
There are some key differences between traditional mutual funds and closed-end funds. Like a single stock, CEF market value is driven by supply and demand for the shares. A manager invests a fixed amount of cash during the initial public offering of the fund's shares. Closed-end funds also may make subsequent public offerings of shares in order to raise additional capital. Investors buy the shares from other investors via a stock exchange, or sometimes in over-the-counter transactions. An open-end mutual fund, on the other hand, continually issues new shares to investors. Cash flows in and out of mutual funds.
There's an important calculation that can help investors separate net asset value (NAV) from a closed-end fund's price, two figures that are often confused. To figure NAV, add the combined value of the CEF's holdings (including stocks, bonds, cash, etc.), subtract liabilities, and divide by the total number of shares held by investors.
CEFs are often bought or sold at a discount to their NAV, and in the difference between price and NAV is the potential opportunity for investors. Investors are targeting CEFs with strong prospects trading at an attractive discount. They're wagering that the gap between the discount and the underlying asset value will close after they buy the fund. Conversely, shares are said to trade at a "premium" when the share price is higher than the NAV.
For example: If a CEF owns 100 stocks that have a combined value of $1 million with $0 liabilities and 100,000 shares outstanding, the fund has an NAV of $10. Investors might not value the portfolio manager's ability to pick stocks, however, so they might only be willing to pay $9 per share of the fund. So, this fund would be trading at a discount of 10 percent to its NAV.
"This isn't to say you should never invest at a premium. Most CEF investors have no qualms investing at slight premiums to NAV. But absolute premiums above 10% should really give you pause," say Morningstar analysts. Morningstar uses the term "absolute" when discussing the share price/NAV relationship; it does so to distinguish from when it is referring to historical discounts and premiums.
Income source. Keep in mind that the primary benefit of purchasing a closed-end fund at an absolute discount is for income-seeking investors to enhance their yield, Morningstar research also states. Morningstar advises against purchasing CEFs at absolute discounts in hopes that the share price will converge to a higher NAV, rather than primarily for the income. See more on the yield calculation at Morningstar.
"For income-seeking investors, instead of viewing discounts as a way to purchase $1.00 of assets for, let's say, $0.70, income seekers should think of buying $1.00 of 'earning assets' for $0.70. After all, if a fund is earning 5% on every $1.00 it invests, those of us purchasing these assets for $0.70 are actually earning 7.1% on our investment," says Mike Taggart, director of closed-end fund research at Morningstar, in a commentary.
"This is referred to as yield enhancement and is, perhaps, the most compelling reason to invest in CEFs for the long term," he writes. "Regardless of subsequent swings in share price, as long as the fund continues to earn 5% and maintains its distribution rate, a buy-and-hold investor under this scenario will continue to earn 7.1%."
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