3 International Closed-End Funds to Earn High Yield

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International investing can be quite lucrative if you are successful at identifying undervalued companies and holding them until they recover. While many investors like to use exchange-traded funds to try and buy international markets, I like to buy things at a steep discounts to their asset value and you cannot really do that with ETFs.

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Source: ©iStock.com/TimArbaev

Because of this bargain-hunting tendency, I like to use closed-end mutual funds to buy international stocks. Frequently, closed-end funds that are ignored or out of favor will trade at a discount to the value of the securities the funds own.

As a bonus, most of them have dividend and distribution policies offering high yield, making them better investments than just owning the ETF basket.

Let’s look at three mutual funds with high yield to play the international market:

3 International Closed-End Funds to Earn High Yield: Alpine Global Premier Properties Fund (AWP)

AlpineFunds185The Alpine Global Premier Properties Fund (AWP) is a perfect example of a closed-end fund with high yield that allows me to invest in a international portfolio at a discount.

This fund invests in what Alpine calls the three pillars of real estate investing: premier property owners, premier property developers, and premier property financiers and investors. They focus on investing in companies that have demographic and economic trends that should provide a favorable investment climate for real estate to gain an additional edge on global property markets.

While the global nature of the fund does allow it to invest in the U.S., more than 70% of the fund is invested outside the domestic market. The fund has a fixed distribution policy that leads to a monthly payout that annualizes at 9.5%.

Best of all, the shares trade for less than they are worth as the market price is currently 16% below the net asset value of the fund.

3 International Closed-End Funds to Earn High Yield: Wells Fargo Advantage Global Dividend Opportunity Fund (EOD)

wells fargo earnings wfc stockThe Wells Fargo Advantage Global Dividend Opportunity Fund (EOD) invests in companies that have attractive dividend policies, or that the managers think have strong dividend growth potential. They favor things like utility stocks, telecom companies, financials and blue-chip energy companies.

About half the fund’s assets are in non-U.S. companies. The fund’s distribution policy is currently providing an annualized payout of 10.9%, so it is definitely an opportunity with high yield.

At today’s price I am buying a portfolio of global dividend-paying blue chips for 15% less than the combined value of the underlying stocks. This allows me to buy global stocks with high yield at a discount price — and that appeals to my bargain-hunting nature.

3 International Closed-End Funds to Earn High Yield: Legg Mason BW Global Income Opportunities Fund (BWG)

LeggMason185We can use the discounted closed-end fund approach to buy global fixed income markets as well. The Legg Mason BW Global Income Opportunities Fund (BWG) invests in what it calls higher-quality bonds with high risk-adjusted real yields.

The fund currently has less than 25% of its assets invested in the United States, so you gain substantial global exposure. About 60% of the fund is invested in global government bonds, with the balance allocated in high-yield corporate bonds, mortgage-backed securities and investment-grade bonds. The current distribution rate is 11.6%, so it is definitely an opportunity to benefit from global bond markets with high yield.

Best of all, we can buy these bonds for less than their quoted value as shares of the fund trade at a 17% discount to their combined net asset value.

As of this writing, Tim Melvin did not hold a position in any of the aforementioned securities. He is the author of the Banking on Profits newsletter covering the community bank stock opportunity and the Deep Value Report that seeks out undervalued stocks that are likely to survive until they thrive and capture the value effect that has been proven to beat the market over time.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/08/3-international-mutual-funds-to-earn-high-yield-awp-eod-bwg/.

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