Sam
Confusing as this plethora of product may be to the average investor, it's really just a testament to competition, entrepreneurship, and good old product differentiation.
It all started with KF about 22 years ago. It was the first opportunity for foreign non-institutional investors to invest in the Korean stock market. Forst Boston was afraid they might not have enough shareholders for the NYSE listing so they invited me along for the investor field trip to Korea. It came out 9/84 at a 30% premium to NAV and steadily climbed to a 150% premium three years later. etfconnect.com
Seeing nice juicy monopoly returns like that, who wouldn't want to compete? A bit late to the party in 1993, Nomura joined in with KEF, by which time both funds had premiums in the mid 20 percent range. KEF underperformed KOSPI year after year, so the premium became a discount and eventually its largest shareholder, Harvard University, led an unsuccessful proxy fight to liquidate KEF.
By May 2000, investors got a chance at a more tax-efficient, and fans of index investing would argue a more management efficient approach, with the EWY Korea ETF.
With a choice of 2 closed-end funds and an ETF, investors who are interested in Korea now have three easy choices for a ready made portfolio of Korean stocks. You can compare the portfolios until you are blue in the face. I own all three and rebalance periodically by selling the greatest premium and buying the biggest discount.
Cheers,
Sam |
