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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Oblomov who wrote (168307)	5/26/2002 6:28:46 PM
From: Michael Bakunin	Read Replies (2) of 436258

I'm not saying it wouldn't work, but JOF/EWJ is not an arbitrage. When JEQ went to a premium, I swapped it for EWJ, since they are approximate proxies for one another -- not so JOF. Looking at the premiums available at cefa.com I'd say your best current bet is SNF/EWP. There are fatter premiums on the high yield funds, but those are a pain to hedge; ditto for JOF, I think. Then there's SNF. The Spain Fund's holdings are relatively comparable to the index fund's, and it's trading at a 27% premium. On the downside, there's the drawback of paying out a 'managed distribution' of 2.5% quarterly. The next one's due in early July. Each $1 capital you're returning you shorted for $1.25, so even that might not be too painful. The market currently is spitting money at anything that looks high yield (premiums on HY CEFs) or foreign income (vanishing discounts there), but it appears to have made a more-than-usually transparent blunder here. Piling into SNF this past month (watch the action at quote.yahoo.com makes little or no sense to me. -mb FD - I recently put on this exact trade, which may well be a sign to stay away.. -g-

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