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Teetering On The Edge


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For those of you looking for escape from the dollar try these two closed-end funds- FAX and FCO. The first is mostly Australian bonds with a smattering of Asian high yield while the second is composed of Gilts, Canadians, Aussies and a few other high quality countries. Oddly enough, these funds trade at discounts to net asset value and pay decent yields. they are both at or near multi-year highs due to the dollar's collapse.

Observations/Cautions --

 

FCO -- 35% of Yield is return of capital (not major concern w/appreciation against dollar. Liquidity might be a problem (low volume). http://biz.yahoo.com/prnews/030113/nym177_1.html

 

FAX -- 34% of Yield is return of capital. Much better liquidity. http://biz.yahoo.com/prnews/030113/nym175_1.html

 

Both -- a little more difficult to understand credit risk -- Not a big believer in S&P ratings -- you are still holding bag after they downgrade.

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