Help!

Nose Cut Off, Face Spited, Now What?

Dear Julian Murdoch,

Please help me understand something (I think this is something that some of your other readers might be interested in as well). The issue is the huge variance in trading values between open end mutual funds and closed end ETF’s.

The open end mutual funds essentially trade once per day at the closing net asset value (NAV) of the fund. The closed end ETF’s trade all during the trading day, often at large discounts to their NAV. In this extremely volatile market, why would an investor want to be forced (by utilizing open end mutual funds) to wait until the end of the trade day to get in or out of a security?

In addition, why would an investor want to pay par value (NAV) on an open end mutual fund rather than purchase something with a built-in gain (a closed end ETF at a significant discount)?

For example, the world stock open end mutual fund Capital World Growth & Income Fund (symbol CWGIX) from American Funds trades once a day at its NAV (0% discount) and yields about 2.80%. Conversely, the world stock closed end ETF BlackRock Global Equity Income Fund (symbol BFD) trades during the day at around $11.22 (a 20% discount to its NAV) and yields around 17.00%.

Would you recommend that I buy CWGIX or BFD? Please explain this phenomenon. I do not understand. Thank you.

Sincerely,
Mark J. Mohr

Too Late to Sell, but Calmer Markets May Lie Ahead

Dear Julian Murdoch,

Please help me understand something (I think this is something that some of your other readers might be interested in as well). The issue is the huge variance in trading values between open end mutual funds and closed end ETF’s.

The open end mutual funds essentially trade once per day at the closing net asset value (NAV) of the fund. The closed end ETF’s trade all during the trading day, often at large discounts to their NAV. In this extremely volatile market, why would an investor want to be forced (by utilizing open end mutual funds) to wait until the end of the trade day to get in or out of a security?

In addition, why would an investor want to pay par value (NAV) on an open end mutual fund rather than purchase something with a built-in gain (a closed end ETF at a significant discount)?

For example, the world stock open end mutual fund Capital World Growth & Income Fund (symbol CWGIX) from American Funds trades once a day at its NAV (0% discount) and yields about 2.80%. Conversely, the world stock closed end ETF BlackRock Global Equity Income Fund (symbol BFD) trades during the day at around $11.22 (a 20% discount to its NAV) and yields around 17.00%.

Would you recommend that I buy CWGIX or BFD? Please explain this phenomenon. I do not understand. Thank you.

Sincerely,
Mark J. Mohr

Commodities: Burst Bubble or Buying Opportunity?

Please explain.

Commodities: Burst Bubble or Buying Opportunity?

Dear Julian Murdoch,

Please help me understand something (I think this is something that some of your other readers might be interested in as well). The issue is the huge variance in trading values between open end mutual funds and closed end ETF’s.

The open end mutual funds essentially trade once per day at the closing net asset value (NAV) of the fund. The closed end ETF’s trade all during the trading day, often at large discounts to their NAV. In this extremely volatile market, why would an investor want to be forced (by utilizing open end mutual funds) to wait until the end of the trade day to get in or out of a security?

In addition, why would an investor want to pay par value (NAV) on an open end mutual fund rather than purchase something with a built-in gain (a closed end ETF at a significant discount)?

For example, the world stock open end mutual fund Capital World Growth & Income Fund (symbol CWGIX) from American Funds trades once a day at its NAV (0% discount) and yields about 2.80%. Conversely, the world stock closed end ETF BlackRock Global Equity Income Fund (symbol BFD) trades during the day at around $11.22 (a 20% discount to its NAV) and yields around 17.00%.

Would you recommend that I buy CWGIX or BFD? Please explain this phenomenon. I do not understand. Thank you.

Sincerely,
Mark J. Mohr