Muni Funds Are Top Closed-End Achievers

Municipal bond funds dominated the list of TheStreet.com Ratings 10 top-rated closed-end funds.

Nine of the funds in the accompanying list of the 10 highest-rated closed-end funds are munis, with three of them single-state funds and one a high-yield muni fund.

This represents a recovery for the muni group, which experienced lackluster performance during the second half of last year. Single-state muni funds were handicapped by potential threats to their exemptions to state income taxes. Then there were the credit-crunch-inspired woes of muni bond insurers, along with turbulence in the auction-rate securities markets.

Observers are cautioned not to refer to the lone high-yield muni on the list as a "junk-bond fund," as the Western Asset Management Municipal High Income Fund(MHF Quote - Cramer on MHF - Stock Picks) has returned high-quality returns of 9.78%, 18.84% and 11.68%, respectively, over the past three months, year to day and 12 months. With a three-year annualized growth rate of 10.57%, it is the only fund on the list with a double-digit compound annual return for that stretch.

The lone equity fund on the top-10-ratings list, the BlackRock Real Asset Equity Trust(BCF Quote - Cramer on BCF - Stock Picks), sports the best three-month and 12-month performance numbers for the group, 13.09% for the quarter ended June 30 and 22.47% for the most recent 12 months.

The "Real Asset" reference in BCF's name fits the current economic times: minerals that are likely to retain their values in this inflationary period. The fund's top portfolio holdings include Rio Tinto(RTP Quote - Cramer on RTP - Stock Picks), Companhia Vale Do Rio Doce ADS(RIO Quote - Cramer on RIO - Stock Picks), BHP Billiton(BHP Quote - Cramer on BHP - Stock Picks) and E.I. du Pont de Nemours.(DD Quote - Cramer on DD - Stock Picks).

The funds on the list are split evenly as to those that ended the year's first half priced at a premium to net asset value per share vs. changing hands at a discount to NAV. The PIMCO California Municipal Income Fund(PCQ Quote - Cramer on PCQ - Stock Picks) and the BlackRock Maryland Muni Bond Trust(BZM Quote - Cramer on BZM - Stock Picks) both ended the second quarter priced at double-digit premiums over NAV, while the Western Asset Managed Municipals Fund(MMU Quote - Cramer on MMU - Stock Picks) and the BlackRock Real Asset Equity Trust(BCF Quote - Cramer on BCF - Stock Picks) were priced, respectively, at hefty discounts of 8.34% and 9.83%.

TOP-RATED CLOSED-END FUNDS
NAME, TICKER & TheStreet.com RATINGS GRADE	3-MO. TOTAL RET'N (%)	YR.-TO- DATE RET'N (%)	12-MO. TOTAL RET'N (%)	3-YR. ANN'L RET'N (%)	DISC./ PREM. OF MKT. VS. NAV (%)
BlackRock MD Muni Bond Trust (BZM) A	3.69	9.96	-2.43	5.37	11.10
BlackRock NY Muni 2018 Income Trust (BLH) A	-0.41	-1.53	6.62	5.28	-0.32
BlackRock Real Asset Equity Trust (BCF) A	13.09	9.41	22.47	N/A	-9.83
Morgan Stanley Muni Inc Opp II (OIB) A	4.65	6.51	0.85	7.05	3.79
Morgan Stanley Muni Inc Opp III (OIC) A	1.54	6.88	-2.26	6.12	1.47
Nuveen Muni Value (NUV) A	-1.15	5.85	3.57	5.23	-0.21
Nuveen Select Tax-Free Inc 3 (NXR) A	2.55	8.73	9.08	6.38	-0.14
PIMCO CA Municipal Income Fund (PCQ) A+	-1.29	0.71	0.41	6.89	12.62
Western Asset Managed Municipals (MMU) A+	1.05	2.70	2.73	5.61	-8.34
Western Asset Municipal High Inc (MHF) A+	9.78	18.84	11.68	10.57	5.57
Source: TheStreet.com Ratings - Data as of 6/30/2008. For an explanation of our ratings, click here.