Metals Closed-End Funds Make a Pretty Penny

Precious metals and fixed-income investments wouldn't seem to have much in common. But they were the only classifications of closed-end funds to achieve positive returns during the first quarter of the year.

Of nine closed-end fund investment objectives tracked by TheStreet.com Ratings that prefaced their respective first-quarter performance numbers with plus signs, eight were fixed-income categories. However, as can be seen in the accompanying table, the winning classification was precious metals, with an average total return of 6.89% for the quarter.

The top precious metals closed-end fund for the quarter, Central Fund of Canada(CEF Quote), invests almost totally in gold and silver bullion. Its shares returned 16.9% for the three months and 33.96% for the latest 12 months. A strengthening Canadian dollar wasn't really needed to help the fund finish the quarter priced at a 5.01% premium over its net asset value per share.

The steady decline of the U.S. dollar helped propel the emerging-market income and the global-income sectors to positive territory during the difficult quarter. However, closed-end funds in the solid government bond category averaged a gain of 4.00% for the period, making it the second best investment objective and the top fixed-income classification.

Not every fixed-income investment objective ended in positive territory. Investment-grade corporate bond funds eased 1.83% on average, while multi-sector bond funds slid 8.23%. The weak economy drove the average high-yield corporate bond fund down 3.11%, while the load participation category, burdened with mortgage-related problems, tumbled 9.62%.

Ironically, however, the credit crunch didn't hold back the average general mortgage closed-end fund, which ended the quarter ahead by 1.79%.

Following a torrid love affair in recent years with international funds, especially of the emerging market genus, investors turned a cold shoulder to the overseas sectors in recent months. That left the non-U.S. equity and emerging markets equity groupings with setbacks for the quarter averaging in the double digits.

After precious metals, the next best equity category was another commodity-related area -- energy/natural resources. Even though one of its component funds --Kayne Anderson Energy Development(KED Quote), moved 8.69% higher -- the group average eased 2.44% during the quarter.

FIRST QUARTER SUMMARY OF CLOSED-END FUND INVESTMENT OBJECTIVE CATEGORIES
CATEGORY	YR.-TO-DATE AVG. RET'N (%)	BEST PERF. FUND, TICKER & TheStreet.com RATINGS GRADE	YR.-TO-DATE RET'N (%)	1-YR. TOTAL RET'N (%)	PREM./ DISCOUNT (%)
Sector - Precious Metals	6.89	Central Fund of Canada (CEF) A	16.37	33.96	5.01
Government Bond	4.00	BlackRock Enhanced Government Fund, Inc. (EGF) C-	4.96	-11.05	-8.22
Emerging Market Income	3.55	Templeton Emerging Markets Income Fund (TEI) B-	7.74	7.25	-5.11
Municipal - High Yield	2.52	Western Asset Municipal High Income Fund (MHF) A+	8.25	0.22	-2.28
General Bd - Investment Grade	2.33	Duff & Phelps Utility &Corporate Bond Trust (DUC) C	8.78	3.03	-7.31
General Mortgage	1.79	PIMCO Strategic Global Government Fund (RCS) C	10.54	2.82	9.80
Municipal - National	1.30	PIMCO Municipal Income Fund (PMF) A	13.34	-2.44	27.52
Global Income	1.09	Templeton Global Income Fund, Inc (GIM) B+	14.94	11.30	2.13
Municipal Single State	1.00	Minnesota Municipal Income Fund II (MXN) C+	8.32	-0.95	-2.68
Corporate - Investment Grade	-1.83	Rivus Bond Fund (BDF) C+	-1.83	-1.74	-9.84
Sector - Energy/Natural Res	-2.44	Kayne Anderson Energy Development Co. (KED) U	8.69	N/A	2.09
Corporate - High Yield	-3.11	PIMCO Corporate Income Fund (PCN) B-	13.62	-4.35	13.78
Growth & Income	-4.01	Cohen & Steers Total Return Realty (RFI) C-	18.44	-4.21	10.43
Equity Income	-4.60	Cornerstone Strategic Value Fund (CLM) C-	21.10	-20.21	52.22
Sector - Financial Services	-5.37	First Trust/Gallatin Finance & Financial Opp'ty (FGB) U	10.73	N/A	7.57
Sector - Health/Biotechnology	-7.59	Gabelli Healthcare & Wellness Trust (GRX) U	-6.06	N/A	-12.25
Global Equity	-7.81	PIMCO Global StocksPLUS&Income (PGP) C-	2.95	-7.94	-2.97
Multi-Sector Bond	-8.23	MFS Multimarket Income Trust (MMT) B-	0.21	-0.85	-13.00
Sector - Utilities	-8.29	DNP Select Income Fund Inc (DNP) B-	4.78	4.37	22.09
Loan Participation	-9.62	PIMCO Floating Rate Income Fund (PFL) D+	-5.38	-21.05	-0.21
Growth - Domestic	-9.84	MVC Capital (MVC) B+	-5.58	0.36	-5.40
Non-US Equity	-12.99	Taiwan Fund (TWN) C	5.08	24.52	-4.71
Emerging Market Equity	-15.14	Indonesia Fund (IF) C	-12.82	7.95	-12.68
Source: TheStreet.com Ratings. Data as of 3/31/2008.