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Strategies & Market Trends : Bonds & Bond Funds

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To: KyrosL who wrote (13)	12/17/2008 7:22:42 PM
From: peter michaelson	Read Replies (2) of 161

Kyros: Thanks for posting your ideas. They give me a focus as I learn how to evaluate closed end funds. I wasn't certain from the etfconnect description that VTA invested in loans, but after reviewing its annual report I see now that it does. What I can't find is any indication of the credit quality of their holdings. The other loan participation funds seem to be averaging B or BB level on the whole. Do you have an opinion on that? I also am concerned about VTA's leverage. I'm seeing $510,000,000 of borrowings that I don't see on etfconnect. By my calculations, that puts VTA at a 46% leverage ratio - that is, $510 million of debt on a $1,106 million portfolio. That seems pretty high added risk on what I assume is low rated debt. Not to say the potential return is not worth the risk - perhaps it is. I sure do wonder also about how accurately a portfolio of loan participations can be valued. Anyway, these are just some concerns and thoughts as I try to get a more universal handle on how to look at these fixed income funds. vankampen.com

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