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CH diverging from ECH

What do you get when you mix an emerging market play with a high dividend yield in a closed end fund?  Well, CH, for one.  It a closed-end fun offered by Aberdeen that trades on the NYSE, and yields nearly 9% (not including last year’s “special” dividend that was nearly 7% by itself).  The Chilean economy appeals to me.  The country has a debt-to-GDP under 10% and a wealth of natural resources, from copper to timber to fishing.  I believe Chile is well-positioned going forward.  With that said, what is the best way to play Chile?  ETF is the standard straight Chile ETF.  CH tacks a 9% yield on and trades a bit more erratically as it both dilutes shares periodically, and is a derivative security.

Currently CH is trading at almost a 10% premium to its NAV due to its upcoming ex-div date.  Check out CH breaking out of a falling wedge…

 

…while ECH remains in its falling channel for now.

CH almost certainly will correct to the downside.  The only question is, as the ex-div date passes, how precipitous will the fall be?   What ECH does at the upper channel resistance may be a useful tell for those contemplating selling CH.

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