CEFs Bounce Back

Summary: Closed end funds (CEF) bounced back the week ending 3/13/09. A reverse pattern of price movement played out among the fund types versus the previous week. Average price appreciation of 13 CEF fund types was 7.3% while the unweighted average for all 648 CEFs was 6.2%. (CEFs in the aggregate are down 1.9% YTD; Distribution Yield was 12.7%; Discount to NAV was 11.5%). Preferred funds, down 21% the previous week, were up 14.0% for the week as investors’ confidence in the stability of the banking system grew.

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For sake of weekly comparison, SPDR S&P 500 (SPY) was up 10.4%. Vanguard Total Bond (BND) and iShares Muni fund (MUB) were essentially flat, up 0.1% and down 0.3%, respectively. Gold (GLD) edged down 1.1%, while oil, as measure by the US Oil ETF, slipped 1.3% as traders await news from OPEC’s weekend gathering.

One of the biggest CEF gainer for the week was the biggest loser last week: DWS RREEF Real Estate Fund (SRQ). SRQ was up 40.4% during the week versus being off 36.5% the previous week. One of this week’s bigger losers was Eaton Vance Insured NY Muni Bond Fund II (NYH), down 15.8%. The Chile Fund (CH) mentioned here last week as a beneficiary of strong copper price was up a modest 5.2%. This compared with Material Select Sector SPDR (XLB) up 11.1%.

Disclosure: Author owns SRQ and CH.

Comments

[JCCIII:]

Joe. I always appreciate your comments on closed end funds. Thank you.

Mar 16 11:02 AM

[BobinMD:]

Joe. I appreciate your articles on CEF's. I see that you own SRQ as I (unfortunately) do as well. DWS has called a special meeting to vote to liquidate both srq and sro. I have learned that Stewart Horejsi appears to be buying shares in a take-over attempt. This is the absolute worst time to liquidate for most shareholders. So do you think DWS is doing this in an attempt to thwart Horejsi at the expense of the shareholders. I can see no reason to vote for liquidation. Is there any downside if the shareholders succeed in voting NO and do you think Horejsi could turn this fund around?
Thanks
Bob

Mar 22 04:26 PM