Are Shares of Dual-Purpose Funds Undervalued?

TLDR: The first publication of dual-purpose investment companies appeared in the United States in the spring of 1967 by Curley and Mcindoe as mentioned in this paper, and they have attracted a lot of attention since then.

Abstract: I: INTRODUCTION M. Louise Curley Robert A. Mcindoe DUAL PURPOSE INVESTMENT COMPANIES first appeared in the United States in the spring of 1967. Today, there are nine of these unique funds with assets of about $400 million. Seven were started for cash; two began with an exchange of securities; six are listed on the New York Stock Exchange with its concomitant advantages. Several articles on dual-purpose investment companies have been published.' They have helped to make investors more aware of the new types of security created in dual-purpose funds and have encouraged analysts to study them, especially the capital shares which for most of these funds are selling at substantial discounts from their net asset values. These are unique securities and experience with them is still limited. As a result investors are still groping toward a satisfactory procedure for appraising their investment value. Table 1 shows the nine funds, the date each commenced operations, their initial assets, their lives and the market values and net asset values of their shares.