Buy Lines, Part 2

Buy Now! What? Part 2

As we embark on second day of investment suggestions, some readers might want to reach for the No Doze. Prepare yourself as we enter the world of closed-end bond funds.

What? Closed-end bond funds (is there an echo in here?)? Despite the name, they are stocks of investment companies. Why? Because they're cheap, trading at a discount to both NAV (which may sound like a post-punk techno band -- New Angry Visigoths? -- but really stands for "net asset value") and to U.S. Treasury bonds. (For more definitions/info, check out The Internet Closed-End Fund Investor).

How cheap are they? At the end of July, closed-end muni bond funds were trading at an average 2.7% discount to NAV, the biggest spread since May and the second-biggest since May 1998, according to Chris Bouffard, closed-end fund analyst at Lipper Analytical Sevices. The average market yield for all muni bond funds was 5.96% at the end of July, about on par with Treasuries, he said -- until you take into account munis' tax-exempt status, that is. ...