The case against Bernard Madoff is far from closed. But the alleged fraudster's closed-end fund holdings are open for public scrutiny.

The 13F filing for Bernard L. Madoff Investment Securities LLC dated Nov. 10 reveals positions in 17 closed-end funds (CEFs), mostly high-yield and senior bank-debt vehicles. Funds in these asset classes last year suffered awesome declines in the value of their underlying securities, or their net asset value (NAV).

Closed-end mutual funds are actively managed funds that raise capital by issuing a fixed number of shares. Like open-end mutual funds, managers buy and sell individual investments in line with their objectives. The shares are traded on an exchange, and prices fluctuate throughout the trading day, based on supply, demand and the changing values of the underlying holdings.

Some of the largest positions were in the New American High Income Fund ( HYB), down 39.9% in 2008; BlackRock High Income Shares ( HIS), minus 36.8%; ING Prime Rate Trust ( PPR), down 42.4%; Van Kampen Senior Income Trust ( VVR), minus 58.8%; and Eaton Vance Senior Income Trust ( EVF), down 47.7%.

It is unknown if Madoff himself purchased the funds for his alleged Ponzi scheme or if they were owned by clients of his market-making brokerage firm. Nevertheless, since most of the CEFs were held for more than a year, Utah-based CEF specialist Art Lipson speculates they were Bernie's picks.

"They don't seem to be trading positions," says Lipson. "And, unfortunately, it was a tough year for those asset classes."

That could be changing, however, as the market for high-yield corporate bonds and so-called "spread products" continues to improve. Discounts for most of Madoff's CEFs have narrowed since last fall and NAVs have recovered considerably over the past week as investors moved away from Treasuries to accept more risk. The iShares High Yield Corporate Bond Exchange Traded Fund ( HYG), for example, rose nearly 5% on Monday after being boosted by a Barron's article that was negative on Treasuries.

So maybe now is the time to follow Madoff's lead. Into beaten-down CEFs, not prison, of course.

Madoff Investments'
Recent 13-F Holdings
Fund
Allocation
(shares)
New Amer High Income Fund
2,057,000
Blackrock High Income Shares
526,475
ING Prime Rate Trust
478,665
Van Kampen Senior Income
326,602
Eaton Vance Senior Income
248,665
Nuveen Floating Rate Income
198,900
Csam Income Fund
158,500
Nuveen Senior Income Fund
124,600
First Trust Four CRNS Sr F 2
118,500
Nuveen Floating Rate Income
103,200
Highland Credit Strategies
102,500
Eaton Vance Sr Floating Rate
59,900
Blackrock Floating Rate Income
42,000
Evergreen Inc Advantage Fund
41,500
Pioneer Floating Rate Trust
31,821
Blackrock Floating Rate Income
28,800
Gabelli Global Deal Fund
25,400
Source: 13-F Filings

Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.

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