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Thursday October 08, 2009
China Fund (CHN): High yield, fast growth
In her High Yield Investing, she suggests, "The China Fund (NYSE: CHN) - ranked in the top 1% of funds in the Pacific/Asia ex-Japan category for the latest ten-year period -- should be an excellent way to play this growth story over the long term." "China's massive stimulus spending and interest rate reductions have succeeded in igniting domestic demand. 
" As a result, GDP throughout Asian emerging markets has jumped to over 10% in the second quarter on an annualized basis, and the Shanghai Composite Index has exploded 67% year to date, four times the gains on the S&P 500. "As the Chinese markets get more richly valued, CHN seems to have an attractive strategy. The strategy seems to be working as CHN has achieved tremendous long-term returns, averaging a staggering 20% per year over the last ten years through August 31st. "The fund is ranked in the top 1% of funds in the Pacific/Asia ex-Japan category for the ten-year period, according to Morningstar. Despite stellar long-term returns, CHN sells at a -6% discount to NAV. "CHN pays a distribution once a year in January. The last distribution was $5.82, consisting of $5.34 long-term capital gains and $0.48 dividend income. At today's price the current yield is 24%. "The average distribution over the last five years was $5.61 with a dividend composition breakdown over the period of 84% long-term capital gains, 10% short-term capital gains and 6% dividend income. "Since most of the distribution is taxable at the 15% capital gains rate, the fund is suited for a taxable brokerage account. "China fund seems to know where to find under-followed growth opportunities in the fastest growing economy in the world while paying a fat distribution. "Management takes a cautious and proven long-term strategy even in the soaring markets and CHN should be an excellent way to play the China growth story over the long term." |
News Flash
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"Chinese markets have been absolutely soaring this year," says long-standing global income expert