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Strategies & Market Trends : Bonds & Bond Funds
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To: Lance Bredvold who wrote (46)12/29/2008 9:21:10 PM
From: DewDiligence_on_SI1 Recommendation   of 161
 
What you’re talking about is called a rights offering. If you don’t have the capital to participate (or simply don’t want to participate), you get screwed. This is an inherent risk in owning any close-end fund; however, you get to own shares at a discount to NAV, which you can’t do in an open-end fund.

In most cases, I think the ability to buy at a significant discount to NAV outweighs the risk of a rights offering and the other drawbacks of a closed-end structure, such as the transaction costs to buy and sell. Regards, Dew

p.s. I have no opinion on FAX one way or the other.
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