A truism made more valid today: Investing is not for the faint of heart. Most of the top-performing closed-end funds in August have crashed in the past few days.
Two that I would not touch have ties to energy. At 13.7%, no fund on the list did better than
Tortoise Energy Capital
. With oil dropping to the $90s, the prospects for its holdings of
Plains All American
have gone south as well.
The other is from the emerging-market-income category. The
Western Asset Emerging Markets Floating Rate Fund
added 8.5% in August before giving it all back this month.
Half the fund's investments are in the sovereign debt of oil-rich countries like Mexico, Brazil, Venezuela and Egypt. A total of 44.5% of its holdings are allocated to corporate debt including
and Mexico's Pemex.
While there are no safe bets in this market, the month-to-date beating taken by
Eagle Capital Growth Fund
has left it trading at a discount to net asset value of almost 10%. That's not a bad way to purchase some of its top holdings,
Johnson & Johnson
, all of which have held up well.
As with any trade, you can lose money. Remember to place stop-loss orders to help protect you from sudden moves against positions.
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.