Top Closed-End Funds: Munis Regain Stability
With seven municipal bond funds dominating the list of the 10 top-rated closed-end funds for the first quarter, it's clear that munis are returning to stability.
The muni sector seems to have come to terms with major concerns that had resulted in disruptions in that segment of the fixed-income markets in recent months.
These included collateral damage from the credit crunch that threatened the triple-A credit ratings of bond insurers. In addition, legal questions were raised last year about exemptions of the funds from state income taxes.
All seven of the closed-end muni funds in the table have produced positive returns for the year to date, with the BlackRock MuniAssets Fund (MUA) rewarding holders with a double-digit first quarter advance of 10.37%. In addition, each of the high-rated muni funds sports an indicated dividend yield of at least 5.5%, with the Morgan Stanley Muni Income Opportunities Trust II (OIB) yielding 6.2%.Six of the muni funds finished the quarter priced at premiums to their respective net asset values per share. The exception was Western Asset Municipal High Income Fund (MHF), which ended the first quarter of the year priced at a discount of 2.2% from NAV. A commentary on the uncertainty of our times, investmentwise, is that the three non-muni closed-end funds on the list invest solely, or at least heavily, in natural resources. The Central Fund of Canada (CEF) is a gold play, while the word "real" in the name of the BlackRock Real Asset Equity Trust (BCF) can be interpreted as "tangible." BCF's stated objective is to invest in sectors such as energy, natural resources and basic materials. Its largest holdings are Rio Tinto (RTB) and Companhia Vale Rio Doce (RIO). Besides its gains from the commodity boom, BCF, with more than half its holdings in international investments, has benefitted from the appreciation of most worldwide currencies vis-à-vis the U.S. dollar. The Aberdeen Australia Equity Fund (IAF) slipped 11.75% in the first quarter, but has appreciated 13.58% in the latest 12 months. Its largest holdings are resource investments BHP Billiton Ltd. and Rio Tinto Ltd.
|TheStreet.com RATINGS TOP-RATED CLOSED-END FUNDS|
|NAME, TICKER & TheStreet.com RATINGS GRADE||INVESTMENT OBJECTIVE||3-MO. TOTAL RET'N (%)||12-MO. TOTAL RET'N (%)||DIVIDEND YIELD (%)||PREMIUM/ DISCOUNT (%)|
|Aberdeen Australia Equity Fund (IAF) A||Non-US Equity||-11.75||13.58||10.8||2.9|
|BlackRock CA Muni Bond Trust (BZA) A||Municipal Single State||4.61||-5.25||5.7||9.8|
|BlackRock CA Municipal Income Trust (BFZ) A+||Municipal Single State||4.28||-7.05||5.9||9.0|
|BlackRock MuniAssets Fund (MUA) A||Municipal - National||10.37||-5.17||5.9||7.9|
|BlackRock NY Muni Bond Trust (BQH) A+||Municipal Single State||1.36||-3.99||5.8||8.3|
|BlackRock Real Asset Equity Trust (BCF) A+||Equity Income||-3.26||17.43||6.7||-15.1|
|Central Fund of Canada (CEF) A+||Sector - Precious Metals||16.37||33.96||0.1||4.0|
|Morgan Stanley Muni Inc Opp II (OIB) A||Municipal - National||1.78||-5.53||6.2||1.1|
|Nuveen Muni Value (NUV) A||Municipal - National||7.08||0.06||4.8||2.2|
|Western Asset Municipal High Inc (MHF) A+||Municipal - High Yield||8.25||0.22||5.5||-2.2|
|For an explanation of our ratings, click here. |
Source: TheStreet.com Ratings -- Data as of 3/31/2008.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV