The board of the Lincoln National Income Fund (NYSE:LND) has announced a proposal to merge the fund into the open-end Delaware Corporate Bond Fund, subject to shareholder approval. A big price jump on the date of the announcement eliminated a significant portion of the discount the fund was trading at, so there is not a lot of profit to be had by buying the shares now as an arbitrage opportunity. This is especially true since, as we’ve seen lately, funds have had difficulty getting these board-supported reorganizations approved, so an investor could end up owning these shares longer than originally anticipated.
However, if there were any financial advisors who were planning on putting their clients into Class A shares of the Delaware Corporate Bond Fund within the next year, buying shares in LND would be a great way to show that they are trying to get the best deal for their clients. Not only can they buy LND at a slight discount, but also the client won’t be hit with the big sales charge from buying Class A shares directly. So the client wins twice. Also, the financial advisor wins twice because 1) they have done what’s in the best interest of their client; and 2) the client may speak with colleagues about the sophisticated strategy their financial advisor used, which could lead to more clients for the advisor.
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