News of the end of Castro's long tenure as president of Cuba boosted the one lone fund investing in Cuba - or rather in companies that benefit from economic activity in the Caribbean. The tiny closed-end fund offers only a fixed number of shares, which can lead to big swings in share price with minimal underlying change in the actual investments in the portfolio - as was the case yesterday:
The closed-end Herzfeld Caribbean Basin fund (NASDAQ:CUBA) CUBA, the only Cuba fund, shot up 17% to 8.70 on Tuesday. A record 1.44 million shares traded after the ailing 81-year-old dictator announced he will resign as president. Castro has held power since overthrowing Gen. Fulgencio Batista in 1959.
The fund seeks long-term capital appreciation and invests in companies from 20 countries in and around the Caribbean.
As a closed-end mutual fund, the Herzfeld fund trades at prices that might differ from the per-share value of their assets. The fund was trading at a 9.61% discount to its net-asset value prior to Tuesday.
Its surge signals hope that Cuba's future will be far different than the past 49 years under Castro. U.S. trade embargoes, enacted to protest Castro's Communist regime, have made life tough on the island nation."
Open-end funds would just issue more shares and would not jump so much in price on one-day on investor enthusiasm alone. We don't recommend buying closed-end funds trading a big premiums to NAV (net asset value).
Castro Quits, Fund Rises
News of the end of Castro's long tenure as president of Cuba boosted the one lone fund investing in Cuba - or rather in companies that benefit from economic activity in the Caribbean. The tiny closed-end fund offers only a fixed number of shares, which can lead to big swings in share price with minimal underlying change in the actual investments in the portfolio - as was the case yesterday:
The closed-end Herzfeld Caribbean Basin fund (NASDAQ:CUBA) CUBA, the only Cuba fund, shot up 17% to 8.70 on Tuesday. A record 1.44 million shares traded after the ailing 81-year-old dictator announced he will resign as president. Castro has held power since overthrowing Gen. Fulgencio Batista in 1959.
The fund seeks long-term capital appreciation and invests in companies from 20 countries in and around the Caribbean.
As a closed-end mutual fund, the Herzfeld fund trades at prices that might differ from the per-share value of their assets. The fund was trading at a 9.61% discount to its net-asset value prior to Tuesday.
Its surge signals hope that Cuba's future will be far different than the past 49 years under Castro. U.S. trade embargoes, enacted to protest Castro's Communist regime, have made life tough on the island nation."
Open-end funds would just issue more shares and would not jump so much in price on one-day on investor enthusiasm alone. We don't recommend buying closed-end funds trading a big premiums to NAV (net asset value).
LINK