Policy Arbitrage—Snap Up Closed End Funds!
June 9th, 2006Jamil Adnerlini reports in the South China Morning Post that China may liquidate or convert closed-end investment funds (which have set maturity dates but are publicly traded) to open-ended funds (which, like mutual funds, can take in new capital anytime and could go on forever). If true, this presents an arbitrage opportunity since most closed-end funds, as Adnerlini notes, “trade at an average discount of about 34 per cent to their net asset value.”
Any more questions about why they call China’s stock markets policy markets?