The Zweig Total Return Fund
The Zweig Total Return Fund (ZTR) operates as a closed-end fund investment company that mostly buys US government treasury bonds, treasury notes, agency nonmortgage backed securities and short-term investments. ZTR is currently aiming for the highest total return of capital through investment in equity securities consistent with the preservation of capital and reduction of risks as determined by fund’s investment adviser.
Same as Zweig Fund Inc (ZF), Phoenix /Zweig Adviser LLC serves as the fund’s investment adviser. However, Zweig closed-end funds are not affiliated with the private hedge funds by Zweg-DiMenna Associates, Inc. In the light of current conditions n the capital markets and economy, ZTR together with ZF, on 2003 has changed its fund distribution policy from fixed to a variable distribution. The variable distribution is based on earnings and distribution requirements under the Internal Revenue Code whilst that of the annual pay of 10% fixed distribution is based on the net asset value of the fund.
ZTR’s edge in the market was that they trade at a much-larger-than-normal discount to its net asset value (NAV). The NAV is the value of all of the investments in the closed-end fund added together, and a fund trades at a discount to NAV when the management has not outperformed other similar investments. In May 2004, ZTR was trading at a 10% discount to NAV, which was a larger discount than it had traded at in years.
One could not wage the risks on the direction of the market. However, the current discount compared with the historical discount, with the effort of the company will lead an investor to consider he has more edge here than with the normal buy-and-hold stock decisions.