Municipal bond funds dominated the list of TheStreet.com Ratings 10 top-rated closed-end funds.
Nine of the funds in the accompanying list of the 10 highest-rated closed-end funds are munis, with three of them single-state funds and one a high-yield muni fund. This represents a recovery for the muni group, which experienced lackluster performance during the second half of last year. Single-state muni funds were handicapped by potential threats to their exemptions to state income taxes. Then there were the credit-crunch-inspired woes of muni bond insurers, along with turbulence in the auction-rate securities markets. Observers are cautioned not to refer to the lone high-yield muni on the list as a "junk-bond fund," as the Western Asset Management Municipal High Income Fund ( MHF) has returned high-quality returns of 9.78%, 18.84% and 11.68%, respectively, over the past three months, year to day and 12 months. With a three-year annualized growth rate of 10.57%, it is the only fund on the list with a double-digit compound annual return for that stretch. The lone equity fund on the top-10-ratings list, the BlackRock Real Asset Equity Trust ( BCF), sports the best three-month and 12-month performance numbers for the group, 13.09% for the quarter ended June 30 and 22.47% for the most recent 12 months. The "Real Asset" reference in BCF's name fits the current economic times: minerals that are likely to retain their values in this inflationary period. The fund's top portfolio holdings include Rio Tinto ( RTP), Companhia Vale Do Rio Doce ADS ( RIO), BHP Billiton ( BHP) and E.I. du Pont de Nemours. ( DD). The funds on the list are split evenly as to those that ended the year's first half priced at a premium to net asset value per share vs. changing hands at a discount to NAV. The PIMCO California Municipal Income Fund ( PCQ) and the BlackRock Maryland Muni Bond Trust ( BZM) both ended the second quarter priced at double-digit premiums over NAV, while the Western Asset Managed Municipals Fund ( MMU) and the BlackRock Real Asset Equity Trust ( BCF) were priced, respectively, at hefty discounts of 8.34% and 9.83%.| TOP-RATED CLOSED-END FUNDS | ||||||
| NAME, TICKER & TheStreet.com RATINGS GRADE | 3-MO. TOTAL RET'N (%) | YR.-TO- DATE RET'N (%) | 12-MO. TOTAL RET'N (%) | 3-YR. ANN'L RET'N (%) | DISC./ PREM. OF MKT. VS. NAV (%) | |
| BlackRock MD Muni Bond Trust (BZM) A | 3.69 | 9.96 | -2.43 | 5.37 | 11.10 | |
| BlackRock NY Muni 2018 Income Trust (BLH) A | -0.41 | -1.53 | 6.62 | 5.28 | -0.32 | |
| BlackRock Real Asset Equity Trust (BCF) A | 13.09 | 9.41 | 22.47 | N/A | -9.83 | |
| Morgan Stanley Muni Inc Opp II (OIB) A | 4.65 | 6.51 | 0.85 | 7.05 | 3.79 | |
| Morgan Stanley Muni Inc Opp III (OIC) A | 1.54 | 6.88 | -2.26 | 6.12 | 1.47 | |
| Nuveen Muni Value (NUV) A | -1.15 | 5.85 | 3.57 | 5.23 | -0.21 | |
| Nuveen Select Tax-Free Inc 3 (NXR) A | 2.55 | 8.73 | 9.08 | 6.38 | -0.14 | |
| PIMCO CA Municipal Income Fund (PCQ) A+ | -1.29 | 0.71 | 0.41 | 6.89 | 12.62 | |
| Western Asset Managed Municipals (MMU) A+ | 1.05 | 2.70 | 2.73 | 5.61 | -8.34 | |
| Western Asset Municipal High Inc (MHF) A+ | 9.78 | 18.84 | 11.68 | 10.57 | 5.57 | |
| Source: TheStreet.com Ratings - Data as of 6/30/2008. For an explanation of our ratings, click here. | ||||||