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Important Updates for Investors

Carla Pasternak's Premiere Issue of High-Yield International Just Released
Income expert Carla Pasternak's debut issue of High-Yield International covers a Taiwanese manufacturer yielding 9.5%... a rare Mexican monopoly yielding 13.4%... and other top-performing investments yielding up to 19.0%.
 

Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it is mandated by law. And I've identified the ONLY stock positioned to capture this growth.

The Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income investors. This massive spending, combined with movement out of U.S. Treasuries, is going to take its toll on the dollar, and international income investors could reap the rewards in the form of higher dividends.



Why a Closed-End Fund is not Equivalent to an ETF

 

By Nathan Slaughter
Editor, The ETF Authority

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Published:  April 19, 2004

I often get questions from readers regarding the many closed-end mutual funds that are readily available to trade. At first blush, ETFs look a lot like closed-end funds. ETFs hold multiple stocks, bonds or other assets in a convenient package that investors can buy and sell as if they were a stock. This confusion between ETFs and closed-end funds is exacerbated because everybody is trying to jump on the ETF bandwagon, especially after last year's mutual fund scandals. One mutual fund company has managed to add to this confusion by renaming their closed-end offerings Closed-End ETFs. These funds are not ETFs, but instead merely represent classic closed-end mutual funds.

Closed-end mutual funds and ETFs are not the same. The similarity ends with the fact that they both look like stocks. The differences include:

-- Closed-end funds rarely trade near their net asset value (NAV), whereas ETFs tend to trade very close to their NAV. This is because ETFs offer an easy-to-use way for institutional investors to create or sell the underlying portfolio of stocks. This creates and arbitrage opportunity that tends to keep the ETFs very close to the underlying value of their holdings. Closed-end funds do not have this capability. In fact, unlike ETFs, where the fund's current holdings are public knowledge, closed-end funds, like open-end mutual funds, typically do not disclose their exact portfolio holdings on a timely basis.

-- Closed-end funds are actively managed; ETFs are passively managed. Since most portfolio managers tend to underperform their benchmark, there is little incentive for me to track these funds.

-- Because closed-end funds are actively managed, in my opinion there is no reason to believe that a trader can effectively use technical analysis to analyze these funds. Technical analysis not only depends on liquidity in the underlying issue, but also requires a crowd. Although there might be a crowd trading the closed-end fund, technical analysis cannot help me forecast what an individual portfolio manager will do.

-- Most ETFs can be shorted on a downtick. By contrast, if the market is falling, you must wait for a higher-priced trade before you'll be able to short a closed-end fund. You don't have to wait for that in an ETF.

-- ETFs tend to be extremely tax efficient. Their portfolios are far less subject to change, so there is less likelihood of having capital gains taxes passed through to you via distributions. There is more of a chance of this happening in a closed-end fund. However, closed end funds can more easily protect against such distributions than open-ended funds can, because there are no redemptions. In that sense, these funds can more easily manage their tax burden than can most ETFs, as most ETFs must match a public index, which can be subject to change (whether the ETF manager likes it or not).

In summary, although ETFs and closed-end funds might look alike at first blush, they are entirely different animals. Do not be fooled by marketing materials from mutual fund companies. Any fund that incorporates the words "closed end" in the title is not an ETF. Although this does not necessarily make the fund a bad investment, you might not be getting what you thought you were.

 

Who Cares What the Market is Doing When You're Pulling in $28,900 a Year in Dividends?
With the safe, growing, high-yield picks that Editor Carla Pasternak recommends every month you don't have to worry whether or not the market has bottomed. You can sit back and collect annual dividend paychecks of $16,300, $19,900 or even $28,900! You can't go wrong looking into Carla's recommendations. A year from now, when you've collected as much as $28,900 from dividends alone you'll be glad you did. Take the first step and, read this report now.


Seven "Yield Doubler" Stocks That Are Clobbering The Dow
Just 12 trading days before the market hit its 6,500-point low this year, the "Yield Doublers" portfolio was born. That was almost 4 months ago. The Dow has rebounded +12% since then -- but our seven "Yield Doublers" have clobbered that figure by a factor of up to 9-to-1... delivering up to +144.2% gains to boot! Go here to see why you should add these "Yield Doublers" to your portfolio today.



We're Putting $50,000 on the Line in Our NEW Stock of the Month Portfolio
We're SO confident in this strategy that we're putting our money where our mouth is... $50,000 worth of it in fact! That's how much we've put into a brokerage account to fund the real-money portfolio for StreetAuthority Stock of the Month. Amy Calistri just made her first purchase, and it's not too late for you to join in and follow along with everything she does. Don't be left on the sidelines, click here to learn more now.


Two Infrastructure Stocks That Are Profiting From Massive Government Spending
Since the stimulus package was signed into law on February 17th, these two infrastructure picks have moved up quickly. One's a worldwide construction company that's already gained +32% to date. The other makes critical copper, aluminum and fiber optic cables... and shot up +41% in a matter of just weeks. Both are headed higher. You’ll find their names in this special report.

 



6 Free Months of Bernie Schaeffer's Option Advisor
Learn the secrets of successful options trading from top trader, Bernie Schaeffer. Start your free 6-month subscription to The Option Advisor newsletter now and get free online access to Bernie's Crash Course in Top Gun Trading Techniques.

3 Penny Stocks Poised to Soar 300%
By the time Wall Street notices the 3 picks revealed in this report, you could be sitting on a fortune.  Click here to get immediate access to an exclusive Free report -- "3 Underground Penny Stocks Poised to Soar."

 

Investor's Business Daily (IBD)
Get 10 Free Issues of Investor's Business Daily (IBD) – Plus 2 Free Weeks of Investors.com

52 Wins in 52 Weeks - 365 Days Without A Loss
Success Trading Group scored 52 wins in 52 weeks! Get their weekend newsletters free and register for Success Trading Group's next stock picks free for 30 days!

 

Investing Doesn't Get Any Easier Than This

Stock picker Amy Calistri's strategy is as simple as investing gets -- just one idea a month designed to make money in today's market. Invest this way and you don't have to worry about oil prices, automaker bailouts, or what the Fed is up to -- because every "bad" economic development actually helps some investment or another.Your investing life can get a lot simpler -- starting today.
Go here to learn about Amy's simple investing strategy.
 


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