Yes. I hold Vanguard VNQ, and up until this week, was tracking along with without any great downside. And here are the CEF REITS just being trashed and as the old saying, thrown out with the bath water. In looking at the holding of these varous funds, that remain in the portfolio of numerous Mutual Fund Companies. We could be sure that the Hedge Funds, which many are being eliminated as Invest Vehicles may be selling also.

appreciate information.

 

del

Here's a theory. I don't think Hedge Funds really hold CEFs because they are so thinly traded (usually.) People wanting income may well be the main buyers. And that may indicate people in or nearing retirement.

 They may be seeing these huge losses and can't stand seeing anymore. So they're all just selling. And all the selling makes potential buyers feels wary. I've been nibbling at what previously were really low prices, but they've plummeted from there. So there's only sellers, no buyers, which makes things really really cheap.

 NRO was over $20 this year. Today it's in the $2 range. And it contains some of the finest REITs out there. What it's selling for and what the reits in it are worth just don't have a resemblance to each other. We are indeed living in fascinating times.

Normal 0

Also see this post for more info:

Will some leveraged CEFs be forced to reduce leverage?

lowriskincome 09-23-2008, 7:11 PM | Post #2565836

After reading that post, how will CEFs with preferred leverage raise cash to liquidate the preferreds other than by selling their investments?  That puts the CEFs in a bad position.  The market for ARPS has disappeared, which has both raised the rates that CEFs must pay on ARPS at the same time that the market crash has made it difficult or impossible to raise the capital to redeem them by other means.  Unless I’m mistaken, this scenario has put leveraged CEF investors in a dangerous position whereas they thought they were in safe investments.  The REIT ETFs such as RWR and VNQ haven’t suffered the crashes that the CEFs have because of the lack of ARPS leverage in the ETFs.  The sky high distribution rates after the crash of the CEFs is a red flag that the market recognizes a danger with the CEFs.  Another danger message from the market is that the ETFs and the underlying securities gained on a day when the CEFs closed in the red again.

These two web sites show that my reasoning is sound about why the REIT CEFs are tanking, although one discusses bond funds.  The concept is still applicable to other leveraged CEFs.  Meeting SEC mandated capitalization ratios threatens the integrity of leveraged CEFs because selling off worthwhile underlying assets might be required.  Unfortunately us investors in leveraged closed end funds are probably victims of the big Wall Street crooks who looted the country with the likes of worthless mortgage securities and related derivatives.

http://www.kiplinger.com/columns/balance/archive/2008/balance0220.html

http://www.boston.com/business/personalfinance/articles/2008/05/27/hub_fund_managers_unfreezing_clients_cash/

 

Nightowl, 

Note the conversation started with JRS and AWP.  AWP is not levered and it still has tanked.  Don't know what this means.  Possibly, many CEF's are being sold indiscriminately.

Jos

Jos,

AWP has another problem instead of leverage, that being foreign investments that have had big problems.  Some of those foreign real estate investments are in companies that not only operate as traditional real estate businesses but are also into banking in a big way.  You probably know what the problem is with that--they held toxic debt and derivatives from the US.  It didn't help us REIT investors that analysts downgraded the industry today.

I don't support or even like the idea of Aztlan, but they did put an interesting article on their web site that offers a hint at what went wrong.

http://www.aztlan.net/jewish_lobby_economic_crisis.htm

Things have now become worse for investors in AWP and other CEFs that have similar holdings in foreign banks.  As part of the rescue plans in parts of Europe, banks that receive government help are required to stop paying dividends.

Good Afternoon Clyde....

http://biz.yahoo.com/bw/081016/20081016006349.html?.v=1

 I haven't read the above but as long as Nuveen is still working the problems with their ARPS refinancing, JRS will be impacted to some extent. Currently JRS has a very low subpar star rating [in our rating system] and there are much better investments in CEF's out there [JRS currently rated 67th in nav performance of the 100 we currently track/add to this that it has a current rating of >20 in risk assessment (Excessive risk in current investing)]. With the exception of REIT's, I am currently looking at nothing but a green board on CEF's [hope it stays that way]....

 

Best Regards/Eddie....

Whatever theory you all have doesn't mean a damn thing. So called experts had no clue. This market has not meant anything for diversified portfolios. The only way to have been safe was alot of cash / Cd's. Everything else has failed to give you a place to hide. That's the bottom line. we just all hope it doesn't take many years to recover.

It's not mere theory. The whole debt system is designed to break down from time to time. It's how the creditors at the top of the food chain take the assets of the debtors. Yes, you are right that cash is king at such times. The lessons to be learned are to avoid debt laden securities and to be quick to get out of the market when a major downtrend appears. Leveraged CEFs such as JRS aren't coming back. They were a trap set for us by the international banking cartel. The Rothschilds and their cronies must be overjoyed. They made a big haul at the expense of billions of people who fell into their credit trap.