Owners of several closed-end funds in recent weeks have received offers that look too bad to accept.

IG Holdings of Phoenix has offered shareholders less than market value for their shares as part of tender offers for a small stake in several closed-end funds, according to fund executives and closed-end fund observers. The offers appear to be part of a broader effort by IG to make below-market offers for publicly-traded companies, fund executives and observers said. These sources said they were unaware of similar, previous efforts by other companies.

In January, shareholders from the Mexico Equity and Income fund received below-market offers from IG. Cohen & Steers Realty Income fund shareholders received below market offers last fall. The practice appears to be even more widespread, involving the Tri-Continental Fund and other closed-end offerings, said Gregg Wolper, closed-end fund editor at Morningstar.

IG appears to be "trying to find some people who aren't keeping a close tab" on the market value of their investments, Wolper said. For investors, there is "absolutely no reason" to accept below-market offers, he said. It could not be determined whether any shareholders had responded to IG's offer.

IG Holdings did not return a call requesting comment.

In some instances, closed-end funds have responded to the offers by issuing press releases or sending letters to shareholders. Cohen & Steers, for example, characterized the offering for its shares as "grossly inadequate" and encouraged shareholders to reject the offer in a letter dated Oct. 21. Mexico Equity and Income said that IG's mid-January offer of $3.00 per share was approximately 75 percent less than the market value of the fund, which closed at $5.25 on Jan. 29.

Closed-end funds are not the only targets of IG below-market offers. Last month, the JDA Software Group of Phoenix and the WD-40 Company of San Diego both said that IG had made "mini-tender" offers, so-called because the offering firm seeks a small position in the target company.

"I think the strategy is to make an offer and see if shareholders are asleep at the wheel," Tom Tranchina, chief financial officer for WD-40, said last week.

While there have been transactions in WD-40 stock, shares typically are held in "street name," or the name of a broker/dealer which conducts a transaction. WD-40 has been unable to determine how many shareholders had taken up IG on the offer, Tranchina said. The offers are legal and IG has not made contact with WD-40 as part of its effort, Tranchina said.

In the case of WD-40, the offer itself told investors that the tender offer price "may differ from those realized" from a sale conducted through a stock exchange. IG recommended investors consult with an accountant or financial planner before accepting the offer.

Wolper said that unless there is misrepresentation, there appears to be little for regulators to do about the practice of making below-market offers for funds. Individuals are free to come to their own terms about selling what they own, Wolper said.

"It's hard to legislate against people offering a price," Wolper said.

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