There's a rule of thumb for investments made in closed end funds -- always buy at a discount, and aim for at least a 10% discount to par if you want to execute a value-type play.

This rule especially applies to the current market, where uncertainty is rife and the specter of a genuine downturn of magnitude is in the cards.

Our data for May suggest there is value in the near term, assuming no cataclysmic events within the next three to six months, for investors to take positions in the Latin American and Mexican markets. Three funds on our list fit in the discount category: the Mexico Fund ( MXF - Get Report), the Mexico Equity Income Fund ( MXE - Get Report) and the Latin American Equity Fund ( LAQ).

In general, emerging markets are the ones trading at higher discounts, which is of course risk-related. But for those investors looking for a riskier asset class combined with a foreign exposure, emerging markets may be the option.

The Clough Global Allocation Fund ( GLV - Get Report) is 70% allocated to U.S. equity, predominantly in oil and gas (which right now is not a positive), and the financial services sector (including banking) as of March. Investors should check to see if there has been any reported change in the sector and geographical allocation because current conditions dictate a rotation out of energy and an increase in allocation to overseas markets.

Further exposure to the banking and financial services sector at this stage assumes that the credit and economic problems of unemployment and inflation are somewhat contained -- which is a large assumption. The fund trades at close to a 9% discount.

Next on the list are options for the emerging Europe with the Central Europe & Russia Fund ( CEE - Get Report) trading at a 7.5% discount and the Morgan Stanley Eastern Europe ( RNE) trading close to a 6% discount. Investors may want to wait and see if these funds get to our 10% discount threshold.

Select Closed-End Fund Data
NAME, TICKER & TSC GRADE OBJECTIVE Return May 2008 (%) Month End Premium/Discount (%)
Mexico Fund (MXF) A Non-US Equity 10.31 -15.10
Mexico Equity & Income Fund (MXE) C+ Non-US Equity 8.75 -13.47
Latin America Equity Fund (LAQ) B+ Non-US Equity 10.01 -9.59
Clough Global Allocation Fund (GLV) C+ Growth & Income 8.44 -8.82
Central Europe & Russia Fund (CEE) B Non-US Equity 14.88 -7.47
Morgan Stanley Eastern Europe (RNE) C+ Non-US Equity 15.39 -5.89
Latin American Discovery Fund (LDF) C+ Non-US Equity 14.05 -5.57
Castle Convertible Fund (CVF) B Growth & Income 11.90 -3.58
Claymore Raymond James SB1 Ety Fd (RYJ) E+ Equity Income 13.20 -3.30
Royce Micro-Cap Trust (RMT) C Growth - Domestic 10.26 -1.51
Templeton Russia&East European Fund (TRF) C+ Non-US Equity 10.19 -1.15
Royce Value Trust (RVT) C Growth - Domestic 10.08 -0.43
Royce Focus Trust (FUND) B+ Growth - Domestic 13.76 2.96
Cohen&Steers Worldwide Realty Inc (RWF) D- Global Equity 14.09 3.17
Japan Smaller Cap Fund Inc. (JOF) E Non-US Equity 9.49 3.36
PIMCO Floating Rate Income Fund (PFL) C- Loan Participation 8.91 5.36
LMP Real Estate Income Fund Inc (RIT) C Growth & Income 9.82 6.22
Cohen&Steers Premium Income Realty (RPF) C+ Growth & Income 8.28 7.60
Turkish Investment Fund (TKF) C Non-US Equity 9.87 8.42
BlackRock VA Muni Bond Trust (BHV) B- Municipal Single State 8.47 21.52

Sam Patel, CFA, is the manager of mutual fund research for the Ratings.

In keeping with TSC's Investment Policy, employees of Ratings with access to pre-publication ratings data must pre-clear any potential trade through the legal department, and are prohibited from trading any security that is the subject of an unpublished rating revision until the second business day after the rating is published.

While Patel cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.