GU International Bond Funds Open End and Closed End Fund Discussion
Question Description
Melanie is considering purchasing shares in an international bond fund. She has limited her search to one open-end and one closed-end fund. Information on the funds follows:
| Open-End |
Closed-End |
|||
|
NAV |
$ 13.63 |
$ 26.19 |
||
|
Sales price |
no-load |
$ 22.96 |
||
|
Annual expenses |
1.17 |
% |
0.94 |
% |
|
YTD return |
11.35 |
% |
11.79 |
% |
a. How much would Melanie pay per share for the open-end fund? How much would she pay per share for the closed-end fund?
b. Is the closed-end fund selling at a discount or a premium to its NAV?
c. Given both funds’ similar returns and expense ratios, would you recommend that Melanie purchase the closed-end fund? Why or why not?
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