This bond fund is a risky buy

Article Excerpt

ABERDEEN ASIA-PACIFIC INCOME $5.90 (Toronto symbol FAP; Shares outstanding: 52.6 million; Market cap: $304.3 million; CWA Rating: Income) is a closed-end fund that mainly invests in Australian debt instruments. It also holds U.S.-dollar-denominated Asian and Latin American bonds, and bonds denominated in the currencies of countries from these regions. Right now, it has 24.6% of its assets in Asian and Latin American currency bonds. The fund holds 27.1% of its assets in Australian currency bonds. The Australian dollar continues to steadily rise on the strength of the country’s recovering economy and higher resource prices. As well, Australia’s benchmark interest rate is 3%, compared with 0.1% in Japan and as low as zero in the U.S. Aberdeen Asia-Pacific Income pays a monthly dividend of $0.05 a unit, for a 10.2% yield. The fund’s long-term outlook remains sound. Its units now trade at a 9% discount to net asset value. Aberdeen Asia-Pacific Income is a buy, but only for aggressive investors. investors…

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