Time to call the codebreaker. Last month's upheaval in the credit markets left a number of closed-end fund managers not only whipsawed but puzzled as well. Bond funds, once considered "defensive," turned toxic as their discounts were stretched. Equity fund discounts, meanwhile, held firm in the face of a ferocious flight to quality. To solve this riddle, TheStreet.com called Dr. Richard Shaker, portfolio manager for Shaker Financial Services and former chief of mathematical research for the National Security Agency. Based in Annapolis, Md., Shaker manages more than $70 million in assets, employing various closed-end fund trading strategies, most notably discount mean reversion. At the end of June, Shaker's fund had a one-year total return of 34.5%, compared with 20.6% for the S&P 500 Total Return Index. For the prior three- and five-year periods, Shaker handily beat that index by 10.6 and 8.2 percentage points, respectively. TheStreet.com: After a wild July, were you happy to finally flip the page on the calendar? Richard Shaker: Absolutely. The last two weeks of July was one of the most difficult trading periods in our 13-year history. In retrospect, given all that happened, especially holding fixed income funds we thought defensive, but turned out to be anything but, we count ourselves fortunate in July to have matched the S&P 500's 3% decline. That still left us up almost 9% year-to-date, more than 5% better than the market. How have closed-end funds generally behaved during all this turmoil? Equity funds were pretty well behaved. Of course, they fell as their net asset values fell, but discounts were stable. And although emerging markets were volatile as always, they outperformed U.S. equities during the July 16 to 31 period. We feel that on a discount basis they aren't the bargains they were in late June, but because we believe that they are the best place to invest for the long term, especially Asia, we maintain a significant exposure to emerging markets in our managed account program.