Originally recommended on Nov. 2/09 (IWB #2938) at $6.51. Trading Friday at $7.70 (all figures in U.S. dollars).
I recommended this fund in November 2009. At the time it was trading at $6.51. It fell as low as $5.70 in May but has been slowly climbing back ever since and was trading on Friday at $7.70.
The main attraction of this fund is its high yield of over 7%, which is the primary objective. Basically, this closed-end fund invests in REITs in developed markets including the United States, Australia, Canada, France, Singapore, and Hong Kong.
The fund can also allocate 25% of its portfolio to preferred shares in the same industry. It is currently trading at a 9% discount to its net asset value and the managers still see good values out there. Yields remain above 8% for most of the fund's preferred share holdings.
Investors continue to be pessimistic about real estate values in the U.S. and Europe but elsewhere confidence is higher and many of the fund's core holdings have been bid up, generating a decent return year-to-date return of 19.7% on NAV (to Oct. 31), despite weakness in May and June. As of mid-year, 44% of the fund was invested in U.S. properties which has no doubt reduced returns somewhat but will offer more leverage against a recovery in the U.S. real estate market (if we ever get one).
I still like this fund. It tends to trade in a narrow range but returns have been steady and it seems the downside risk is fairly low at this point.
Action now: Hold.
Disclosure: Long IGR