Cornerstone Strategic Value Leads Pack of Closed-End Funds
Many of the closed-end funds that have had a tough time over the last 12 months came roaring back in the first quarter. Closed-end funds are portfolios of securities bought and sold like stocks throughout the trading day.
They differ from exchange-traded funds in that closed-end funds don't continuously issue and redeem shares. So, closed-end funds are subject to supply and demand pressures. As investors buy up the limited number of shares being offered for sale, these funds can trade at prices above their net asset value (NAV).
The excess in price over NAV is the premium percentage. High or rising premium percentages reveal securities in demand but also represent the risk of price decline even as the underlying securities hold their value or rise modestly.
Funds trading at prices below NAV are said to be selling at a discount. This is not the case for any of the top ten closed-end performers.
For the first quarter of 2008, the best performing closed-end fund is the C- rated
Cornerstone Strategic Value Fund
(CLM) - Get Report
. This fund returned 21.10% in the three months ending March 31. At 52.2% above NAV, the fund has been bid up to the largest premium of the top ten. One reason for the huge premium may be the monthly income being paid out at an indicated dividend yield of 17.85%.
Holdings contributing to the positive performance of the Cornerstone Strategic Value Fund include quarterly gains of 27.86% from
CSX
(CSX) - Get Report
, 24.38% from
Yahoo!
(YHOO)
, 20.68% from
XTO Energy
( XTO), and 17.76% from
BJ Services
( BJS).
In second place, gaining 18.44% for the quarter is the C-rated
Cohen & Steers Total Return Realty Fund
(RFI) - Get Report
.
At quarter-end, this fund was paying a dividend yield of 8.85% and trading at a modest premium of 10.4%. REIT holdings account for 97% of assets. Firstquarter returns of 25.65% in
UDR
(UDR) - Get Report
, 18.30% in
Mid-America Apartment Communities
(MAA) - Get Report
, 16.51% in
Cedar Shopping Centers
(CDR) - Get Report
and 15.12% in
Extra Space Storage
were the best of the lot.
Third place belongs to
Cornerstone Total Return Fund
(CRF) - Get Report
returning 17.09% in the first quarter. This fund is rated E+ due to its volatile price history. The fund's quarter-end dividend yield of 17.79% is high, but so is its 51.9% premium. The largest holdings include
Exxon Mobil
(XOM) - Get Report
,
General Electric
(GE) - Get Report
,
Citigroup
(C) - Get Report
,
AT&T
(T) - Get Report
, and
Microsoft
(MSFT) - Get Report
.
Ten Best Performing Closed-End FundsRanked by first quarter returns
Fund (Ticker) Rating | Total Return 3 Month | Total Return 1 YR | 3/31/08 Premium | Objective |
Cornerstone Strategic Value Fund (CLM) C- | 21.10% | -20.21% | 52.20% | Equity Income |
Cohen & Steers Total Return Realty (RFI) C- | 18.44% | -4.21% | 10.40% | Growth & Income |
Cornerstone Total Return Fund (CRF) E+ | 17.09% | -30.92% | 51.90% | Equity Income |
Central Fund of Canada (CEF) A | 16.37% | 33.96% | 5.00% | Sector - Precious Metals |
Templeton Global Income Fund, Inc (GIM) B+ | 14.94% | 11.30% | 2.10% | Global Income |
PIMCO Corporate Income Fund (PCN) B- | 13.62% | -4.35% | 13.80% | Corporate - High Yield |
PIMCO Municipal Income Fund (PMF) A | 13.34% | -2.44% | 27.50% | Municipal - National |
First Trust Strategic High Income Fund III (FHO) U | 13.21% | -36.97% | 18.50% | Global Income |
Cohen & Steers Quality Income Realty Fund (RQI) E+ | 12.06% | -19.96% | 2.00% | Growth & Income |
BlackRock Investment Quality Municipal Trust (BKN) B+ | 11.60% | -10.15% | 19.00% | Municipal - National |
Source: TheStreet.com Ratings. For an explanation of our ratings,
.
Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.
