Central Fund of Canada (CEF)

Investing in commodities stock can be very volatile. The other alternative is investing in closed end fund or exchange traded fund or mutual fund. This article will focus on top performer gold closed end fund, Central Fund of Canada fund (Ticker: CEF).

Central Fund of Canada fund objective is to provide in alternative investment vehicle to investors interested in exposure to commodities through holding in gold bullion and silver bullion. The fund investment policy required the fund to maintain a minimum of 90% of its net assets in gold and silver bullion of which at least 85% must be in physical form.

Central Fund of Canada Fund Fact

• Category: US Equity-Commodities
• Fund Sponsor: Central Group Alberta Ltd

• Portfolio Managers: J C Stefan Spicer (14 Sep 1983)
• Ticker: CEF 
• NAV Ticker: XXCEFXX 
• Average Daily Volume (shares): 1,323,000 
• Average Daily Volume (USD): $24.449M
• Inception Date: 9/14/1983
• Inception Share Price: $10.55
• Inception NAV: $9.98
• Fiscal Year End: October 31

This fund has one of the largest total net assets with $5.7billion as April 27th 2011. It only charges a small annual expense ratio of 0.34%. There is no interest expense in the net expense ratio. The fund sponsor is Central Group Alberta Ltd. The fund manager is J C Stefan Spicer since 1983. The fund paid an annual distribution of 0.04%. The latest distribution is paid on November 12, 2010 in the amount of $0.0085 per share.

As April 26th 2011, the Top 4 sectors are Gold Bullion (51.85%), Silver Bullion (46.12%), Net current Asset (2%), and short term debt (0.01%). As April 26th 2011, the fund market price ($23.77) is currently traded at 1.12% discounts from the fund’s Net Asset Value (NAV: $24.04).

Several advantages in investing in this fund:

• It is easy. Hence this CEF is traded like stock on the open market, anyone can trade this closed end fund (CEF)
• No bullion contract, logistic, storage fee, insurance for share owners
• No fee to trade this CEF except your brokerage fee
• All the gold and silver bullion is stored in treasury vaults at Canadian chartered bank
• It is available to anyone in North America

Investing in this fund may involve some risks such as

• Investment and market risk
• Credit risk
• Non diversification risk
• Commodities price risk

Disclosure: No Position