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Templeton Global Income (GIM) cuts its dividend

fundalarmfundalarm
edited September 2012 in Fund Discussions
I know some on the board are using an open-end cousin (loaded version) or GIM, like yours truly, which has historically traded at a premium to NAV. Well... Today the fund is loosing its premium due to the cut in distribution rate. This might be a decent entry point for those who were looking for one. The management acknowledged difficulties getting paid in global government bonds with interest rates at all time low. They keep low duration to prepare for the ultimate (who knows when) rise in interest rates, but suffer the lower yield as a consequence. There is no free lunch after all. Here is the press release. http://www.marketwire.com/press-release/templeton-global-income-fund-gim-announces-dividend-nyse-gim-1697094.htm

Comments

  • scott
    Buying opportunity, or another concerning sign about fixed income? I'm guessing there will be similar announcements from other funds in the weeks ahead.
  • CharlesCharles
    edited September 2012
    Reply to @scott: So, you're guessing bonds have peaked?
  • scott
    edited September 2012
    Reply to @Charles: No, could go on for far longer than anyone would expect. I am, however, concerned about the gigantic amount of retail money that has gone into fixed income when it reverses - and that could take far longer than anyone may expect (although I believe the longer it takes to reverse, the more powerful the reverse may be.) I think there will be more announcements like the GIM one above, and yet, something like GIM will be viewed as good manager, still offers a dividend and now the premium over NAV has come down.

    I'm kind of curious if there will be a fair amount of money in fixed income that will just stick in that asset class for years any which way - those who are retired/near retired, who just do not want to take equity risk again and all they care about is income. Fund inflows are another week of outflows from equity funds and inflows to fixed income. The only fixed income-specific fund I have is PUBDX.
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