Can I Find Good Info on Closed-End Funds on the Web?

Can you recommend a Web site with links to information about Nuveen closed-end bond funds? I went to the Nuveen site and did not find much. It looks like the funds have pretty good yields, but I would like more details before I buy anything.

-- John J. Skerencak Jr.

John,

At the risk of incurring the wrath of the masses, I'm going to suggest that valuable research on closed-end funds is one area where it might make sense to use the services of a full-service broker.

You can find closed-end fund data on the Web, but they're neither free nor terribly useful. In the case of the Nuveen funds, information you can buy on the Web doesn't tell you much beyond what Nuveen will tell you for free. You say you didn't find much on Nuveen's site. In my opinion, the site tells you quite a bit, though not enough to make a fully informed decision.

Here's what I was able to find out: In addition to Nuveen's Web site, which lets you download two-page reports on each of its closed-end funds, there are at least a couple of sources of closed-end fund information on the Web: INVESTools and the Internet Closed-End Fund Investor.

INVESTools makes you register, which is free, and then, if you enter credit-card information, it lets you download Morningstar's one-page closed-end fund reports for $5 apiece. Closed-End Fund Investor charges $20 a month for unlimited access to its database of information from CDA/Wiesenberger, a leading provider of closed-end fund data.

Is either worth it? If I'm wrong, please tell me why, but I don't think so.

Let's take a walk through the various options. Both sites have free samples, so you can have a look at the form these things take.

Morningstar's one-page report contains a wealth of information to be sure, but before you surrender your credit-card number and order up a whole bunch of them, the company's Web site offers some of the info for free. Much of the rest can be had for as many funds as you care to look up for a monthly fee of $9.95. The company's Quicktake reports contain the same information as the one-pagers on INVESTools (with more current performance data), except for the several paragraphs of analysis, which can be valuable.

Closed-End Fund Investor offers most of the numbers you might care to know, but no discussion or analysis of why the numbers look the way they do.

Nuveen makes loads more information available on its Web site about its closed-end funds than other leading providers of exchange-traded income funds do. In fact, the information offered by the fee-based sites largely duplicates what Nuveen tells you. Still, the Morningstar and CDA/Wiesenberger reports have some important information that Nuveen doesn't provide. They tell you how the fund has done relative to its benchmark, and they include its expense ratio.

Even so, I'm not convinced these sources tell you all you might want to know. To try and get a handle on how they might fall short, I looked at a research report on a Nuveen fund published last Friday by Prudential Securities closed-end fund analyst Kristoph Rollenhagen. Rollenhagen, whose research is available only to Prudential clients, initiated coverage of (NPP)Nuveen Performance Plus Muni with a sell recommendation.

His analysis boils down to this: NPP's 5.88% yield as of Jan. 8 compares favorably to its peers', but even though the fund traded at a discount to net asset value of around 0.4%, compared with its peers' average premium of 1.5%, the discount "does not come close to compensating for, in our view, the attendant downside we currently associate with owning NPP."

The downside, Rollenhagen says, is that an inordinately large share of the bonds in the portfolio becomes callable this year and next year. Assuming the issuers call the bonds -- which they will undoubtedly do, since interest rates are much lower now than they were when this fund was launched in 1989 -- the proceeds will have to be invested at much lower interest rates. That will lead the fund to cut its dividend. Based on how much he thinks the dividend is going to fall, Rollenhagen doesn't think NPP is trading at enough of a discount.

Since Rollenhagen issued his report, NPP's share price has fallen nearly 2%, from 15.05 to 14.75 (see chart).

Would either Morningstar or CDA/Wiesenberger have protected you from Rollenhagen's report if you'd consulted them on Jan. 7 and decided to buy NPP? The CDA/Wiesenberger report doesn't tell you anything about call risk. Morningstar's one-pager talks about it in the analysis, saying the fund's dividend "is almost sure to face dramatic cuts." But ironically, the most useful information on call risk may come from Nuveen, which includes in its profile a breakdown of when the bonds in the fund become callable (38.9% are callable by the end of 2001, for example). That information can be used to compare NPP to other Nuveen funds, and it's not available anywhere else -- except in reports like Rollenhagen's.

But they aren't generally available to anyone but full-service brokerage clients. (My informal survey of the leading discount brokers didn't turn up any that make opinionated commentary by analysts available to their clients.) So if you're serious about closed-end funds, it might pay to do that portion of your investing through a full-service firm that will give you access to its analysts' work.

The world of income closed-end fund analysts is very, very small. Besides Rollenhagen, it includes Mariana Bush at Everen Securities (who's been quoted in this space a number of times), Dennis Emanuel at Salomon Smith Barney, John Maier at PaineWebber, Mike McGrath at Gruntal, Ed McRedmond at A.G. Edwards, Ron Santangelo at Merrill Lynch and Robert Young at Morgan Stanley Dean Witter. Have I neglected to mention anyone's favorite income closed-end fund analyst? Please let me know.

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Elizabeth Roy answers your bond fund questions on Friday. Dagen McDowell answers your mutual questions Monday through Thursday. Send questions on either topic to [e-mail] and please include your full name.

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