Hi Guys- I got a bunch of mutual fund preferred shares to value…close-end fund investing in common stocks…common stock of the fund is widely traded, say the past 5 year avg return is 15%, net asset coverage ratio for the pfd are 2.5…i got the div. rate of the preferred shares…am trying to come up with the “required rate of return”…any suggestion on what I should be looking at for this? or am I just completely off…? BTW…is there any index on mutual fund shares? (Lehman got one?) or is there any index on CDS…(So I was thinking to use a CDS index/N to be the ROR…)
Hi abv, look at the link below: http://www.commonfund.org/Commonfund/Archive/CF+Institute/The+Difference+between+IRR+and+TWR.htm If you go through the website you I think it will help you to get a better idea. I hope this help!
What are you guys talking about more specifically? I haven’t had coffee yet but strangedays post seems a non-sequitor. I don’t know much about mutual fund preferred shares but I think lots of them are auction rate securities, yes? That means you need to come up with an opinion about the liquiidty problem in that market. Also, how does the capital structure work on these? If the fund has trouble then whata happens to preffered investors. If the mutual fund company has problems whaat happens to the preferred investsors?
Joey, My post was just to give additional information regarding mutual funds. Nothing pretentious.
Thanks Guys…right, I am actually looking at auction rate…say…I want to add random number - say 200 bps as the liquidity…but what base rate should I be adding it on? …Trying to think of something comparable…