Is anyone doing any research on the closed end bond funds?
Are any higher quality funds trading at unsustainably high discounts?
I'm thinking that I'll be wanting to nibble here and there, but the first place to go is the quality. I fear that the lower quality paper still will have some hard drops here and there ahead and that may yet need further discounting.
Anyway, I'm smart enough to know that there are better bond guys than I posting here. I'd like to get some feed back from the experts.
Mark
ogm, et al. Closed End Fund ?
Started by
OEXCHAOS
, Aug 05 2007 11:57 AM
1 reply to this topic
#1
OEXCHAOS
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Mark S. Young
Posted 05 August 2007 - 11:57 AM
Mark S Young
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#2
ogm
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Posted 05 August 2007 - 12:26 PM
Unfortunately there is no deep discounts on really quality stuff just yet.
We need the end of the world mentality for it 
Even then I think, high quality will demand premium. But you can pick up many funds with good distributions right now at reasonable price to NAV range. So far the massacre is mostly in real estate arena.
For example, Russian debt that is rated junk, is actually a reasonable buy here, since Russia is running surplusses. Treasuries have more risk the Russian debt, aside from political risks. Brasil debt doesn't look bad either. So funds like
Speaking of subrime in your last post.... "AAA rated" top tranches of subrime CDO's are trading at 90-95 cents on a dollar. Just a back of the enveloped calculation says that we need to have 50+% default rate on subrimes in order for these prices to be justified.
I mean we need to completely wipe out all tranches before these, just so they stopped receiving payments. Isn't that how CDO's are structured ?
Ok, I can understand the BBB stuff trading for pennies if at all. But I think the discounts got too deep.
So the NAV's on those real estate Closed end funds came down, even though I think the NAV's themeselves are being very heavily discounted. The whole idea of Real Estate is being discounted
I picked up some NRO here in real estate closed ends. As long as they keep making those distributions, I'm prepared to ride it for a while. NRI is another well diversified REIT closed end fund.
Even then I think, high quality will demand premium. But you can pick up many funds with good distributions right now at reasonable price to NAV range. So far the massacre is mostly in real estate arena.
For example, Russian debt that is rated junk, is actually a reasonable buy here, since Russia is running surplusses. Treasuries have more risk the Russian debt, aside from political risks. Brasil debt doesn't look bad either. So funds like
Speaking of subrime in your last post.... "AAA rated" top tranches of subrime CDO's are trading at 90-95 cents on a dollar. Just a back of the enveloped calculation says that we need to have 50+% default rate on subrimes in order for these prices to be justified.
I mean we need to completely wipe out all tranches before these, just so they stopped receiving payments. Isn't that how CDO's are structured ?
Ok, I can understand the BBB stuff trading for pennies if at all. But I think the discounts got too deep.
So the NAV's on those real estate Closed end funds came down, even though I think the NAV's themeselves are being very heavily discounted. The whole idea of Real Estate is being discounted
I picked up some NRO here in real estate closed ends. As long as they keep making those distributions, I'm prepared to ride it for a while. NRI is another well diversified REIT closed end fund.
Edited by ogm, 05 August 2007 - 12:29 PM.
