Adams Express (ADX) is a closed-end mutual fund that has Apple shares as one of its top holdings. It also holds other positions in energy stocks that are likely to show continued gains in the coming years. Another large position in ADX is Petroleum & Resources (PEO), which is closed-end fund focusing on energy. Other top holding in ADX include (but are not limited to): Microsoft (MSFT), General Electric (GE), Oracle (ORCL), PepsiCo (PEP), Procter & Gamble (PG), JP Morgan Chase (JPM).
ADX is an interesting closed-end fund for several reasons. It has been trading at a 15% discount (average) to its net asset value for the past few months. This means you are buying into positions like Apple, other tech stocks and energy funds like PEO for about 15% less than they are actually worth. I believe the market should be valuing a fund that holds shares in growth stocks like Apple, as well as energy stocks, for something close to net asset value.
In time, the market could become more efficient and the discount to net asset value in ADX could diminish. ADX does buy back its own shares on the open market from time to time and this too can help boost the share price. Another reason I like ADX is because it has very low expense ratios which are currently less than 1% annually. ADX has a long history, dating back decades, and currently has assets over $1 billion.
The discount to net asset value has been dropping recently and now is about 13%. It's too early to call this a trend but it could be a sign that the market is waking up to the prized assets in this fund, which should not be trading for such a large discount.
For more information on ADX and to see it's current holdings and the discount to NAV, see ETF Connect.
I think ADX is a great alternative to some ETFs and mutual funds because it has diversification, top quality holdings, reasonable management fees and a huge discount to net asset value which could help boost investment results for anyone buying now.
Of course, there are no guarantees that the discount to net asset value will narrow, but I doubt the discount will get any wider. I plan to buy ADX shares during the next market correction.