Make Your Move on Cheap Closed-End Funds

Closed-end funds are on sale. A fire sale.

Thanks to the panic, you can buy $1 worth of assets for 85 cents, or less.

What's not to like?

For the uninitiated, closed-end funds are very similar to mutual funds, except that they issue only a fixed number of units. To invest in the fund, you buy the shares on an exchange as you would regular stocks.

They can be an absolute steal for the canny investor who is willing to go against the crowd, because at times people who need to get out of a fund in a hurry will just sell these shares for a lot less than they are worth.

Their loss, your gain.

Mariana Bush, a closed-end fund analyst at Wachovia Securities, believes this is happening right now. She calls it an "historic" moment and says many funds have fallen to "extreme" discounts to their underlying net asset value.

No kidding. There's a conservative municipal bond fund selling for 8.8% off.

Bush has given clients a list of her favorite funds that are selling for big discounts right now. They cover the waterfront, from funds that invest in stocks to those that invest in emerging-market debt, municipal bonds and foreign currencies.

The kicker? Most of these closed-end funds offer great dividend yields, and when you buy them at a discount you simply get more dividends for your money each month.

Here are 11 of the funds that Bush recommends.

Their Loss, Your Gain These 11 closed-end funds trade at big discounts to NAV as of Aug. 17
Fund Name & Ticker	Price $	Discount %	Yield %
W. Asset Interm. Muni (SBI)	8.7	8.8	4.8
Hancock Patriot Prem. Divi II (PDT)	10.22	16.7	5.6
Lazard World Divi & Inc. (LOR)	18.99	14.2	7.4
BlackRock Real Asset Equities (BCF)	14.3	13.5	7.6
DWS Global High Inc. (LBF)	8.02	14	7.5
Currency & Inc. (GCF)	17.62	9.5	8.2
Calamos Strategic Total Return (CSQ)	13.75	11.1	8.5
BlackRock Preferred & Equity (BTZ)	18.73	11.5	10
BlackRock Enhanced Capital & Inc. (CII)	19.95	11.8	9.7
BlackRock World Investment (BWC)	14.82	9.4	9.2
Eaton Vance Tax Mgd Div. Eq. Inc. (ETY)	18.19	4.5	10.1
Source: Nuveen Investments. Note: Yields are forecast only

(SBI Quote)Western Asset Intermediate Muni Fund (SBI) is a conservative municipal bond fund. It isn't even taking much risk on long-term interest rates, because its weighted-average maturity is about five years. At $8.70 a share it is trading at a remarkable 8.8% discount to its underlying NAV. This means the fund is now yielding 4.8%. And of course it invests in municipals, so the income is exempt from federal income tax.