Bank Fund Tops Quarter's Closed-End Fund Performers

With all of the trouble financial stocks have been in lately, it may come as a surprise that the best-performing closed-end fund in the third quarter is a fund that focuses exclusively on banks and thrifts. What's not surprising are the positive returns from investments partially sheltered from the economic maelstrom.

Banks dominated the news again Friday. Before Congress passed Treasury Secretary Henry Paulson's financial bailout plan in the afternoon, Citigroup (C Quote) was crying "foul!" on surprise news this morning that Wachovia (WB Quote) had inked a $15 billion merger deal with Wells Fargo (WFC Quote). Citigroup, which had agreed to buy Wachovia on Monday, swiftly sank while Wachovia and Wells Fargo soared.

All three banks are holdings of the John Hancock Bank and Thrift Opportunity Fund (BTO Quote). The fund's 14.2% third-quarter return represented a bounce-back from the sector bottom in July, bringing the one-year damage to a negative 22.2% return. ...