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 (TYY) . With oil dropping to the $90s, the prospects for its holdings of Kinder Morgan (KMR) , Plains All American (PAA) , Enbridge Energy (EEP) and Sunoco Logistics (SXL) have gone south as well.
The other is from the emerging-market-income category. The Western Asset Emerging Markets Floating Rate Fund (EFL) 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 HSBC Bank (HBC) , Gazprom (OGZPY) and Mexico's Pemex.
While there are no safe bets in this market, the month-to-date beating taken by Eagle Capital Growth Fund (GRF) 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 (JNJ) , Colgate-Palmolive (CL) , PepsiCo (PEP) , and Sysco (SYY) , all of which have held up well.
|Best Performing Closed-End Fund for Each Objective in August |
|Objective||Fund (Ticker) Rating||August 2008 Total Return|
|Corporate - High Yield||BlackRock Debt Strategies Fund Inc (DSU) C||4.52%|
|Corporate - Investment Grade||Rivus Bond Fund (BDF) C+||3.44%|
|Emerging Market Equity||Templeton Emerging Markets Fd (EMF) C+||-7.22%|
|Emerging Market Income||Western Asset Emerg Mkts Fltg (EFL) B+||8.52%|
|Equity Income||J Hancock Preferred Income III (HPS) D+||7.40%|
|General Bd - Investment Grade||BlackRock Income Opportunity Trust (BNA) C+||2.72%|
|General Mortgage||PIMCO Strategic Glob Gov Fund (RCS) C-||8.54%|
|Global Equity||Gabelli Global Deal Fund (GDL) C+||4.21%|
|Global Income||AllianceBernstein Global High Inc (AWF) B+||4.01%|
|Government Bond||BlackRock Enhanced Government (EGF) C-||2.98%|
|Growth - Domestic||Eagle Capital Growth Fund (GRF) C-||9.23%|
|Growth & Income||The Cushing MLP Total Return Fund (SRV) U||7.32%|
|Loan Participation||Eaton Vance Credit Opportunities (EOE) D||3.94%|
|Multi-Sector Bond||Highland Credit Strategies Fund (HCF) D||2.95%|
|INSERT||Nuveen Muni High Income Opport 2 (NMD) U||2.98%|
|Municipal - National||Morgan Stanley Muni Inc Opp (OIA) C+||6.01%|
|Municipal Single State||Eaton Vance Insured MA Muni Bond (MAB) D+||7.40%|
|Non-US Equity||India Fund (IFN) C+||0.32%|
|Sector - Energy/Natural Res||Tortoise Energy Capital (TYY) C-||13.68%|
|Sector - Financial Services||First Trust/Gallatin Spl Fin & Finl (FGB) E-||4.89%|
|Sector - Health/Biotechnology||BlackRock Health Sciences Trust (BME) B+||3.11%|
|Sector - Precious Metals||Gabelli Global Gold Nat Res&Income (GGN) B+||-5.19%|
|Sector - Utilities||DNP Select Income Fund Inc (DNP) B-||3.15%|
|Source: TheStreet.com Ratings|
As with any trade, you can lose money. Remember to place stop-loss orders to help protect you from sudden moves against positions.
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