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Money for Nothin’ and the Bonds for Free

By Matthew Blume, CFA

If someone offered to sell you a $1 bill for $0.87, would you do it?  Unless you’re simply terrible at math (or for some reason you don’t like money), the answer should be a resounding yes, of course.  But why even bother asking such a ridiculous question?  Economics 101 teaches us that it is not rational for anyone to sell $1 for $0.87.

Or would they? Right now, that is exactly what a buyer of the Templeton Global Income Fund (GIM) gets: $1 of assets for $0.87.  How can this be? What’s the catch?  And what do you really get for your $0.87?  This article will answer all of those questions while also shedding a little light on a dark corner of the market where great bargains often hide.

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This information is prepared for informational purposes only and should not be considered investment advice.  The comments should not be construed as a recommendation of individual holdings or market sectors. There is no guarantee that the type of investments discussed herein will outperform any other investment strategy in the future. The views expressed are those of the authors as of the date of publication of this report, and are subject to change at any time due to changes in market or economic conditions.

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