DWS Dreman Value, Inc.me Edge Fund, Inc. (AMEX:DHG)

NetscribeETF (37.64) Submitted: 3/29/2007 9:30:17 AM : Start Price: $21.83 DHG Score: -37.83

DWS Dreman Value IncomeEdge Fund is a closed-end management investment fund with investment objective to achieve a high level of total return. The fund invests in dividend paying stocks and other instruments like high yield bonds, preferred stocks and real estate investment trusts. As on December 31 2006, 61% of the portfolio composition was concentrated in common stocks.
The portfolio is primarily focused on the financial services as 43% of their funds are invested in this sector. Financial services have a positive outlook in the near future driven by investment banking and the brokerage industry. Consolidations are happening at a very fast pace and various players in the investment banking space like Morgan Stanley and Goldman Sachs have posted strong top line performance due to higher M & A fees.
One of the concerns for the fund is the prospect of real estate investment trusts (REITs), which constitutes 16% of the total sectoral composition. The outlook for REIT arouses skepticism, as the sharp slowdown in the U.S. housing market is likely to paralyze the demand for the leased space and affect the returns for the sector. To add fuel to the fire, rising crude oil prices is mounting the inflationary pressures, which could negatively impact the bond markets in the future.
However, prospects of energy companies look bright as oil prices are soaring backed by possibility of supply cuts due to tensions over Iran’s nuclear program. This denotes a good picture for the fund, as 29% of the funds are concentrated towards the energy sector. Moreover, crude oil prices are expected to surge further on account of its rising demand in summer and augmentation of the U.S. crude stockpiles. Health care and Telecom together form 7% of the sectoral mix. Increasing number of aging U.S. population resulting from the transition of baby boomers to senior citizens has helped the health care industry to gain traction. Outlook for telecom sector is also good considering the rapid growth of wireless industry on account of improved network coverage and lower prices. Thus as benefits outweigh the weaknesses, it is expected that the fund would deliver good returns in the near future.