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Closed-end funds, investment advisor
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The following tables include year-to-date (YTD) and four-year NAV and market price performances for most of the equity based high yielding Closed-End funds (CEFs) available to investors, where "equity based" is defined as having at least 50% of a fund's portfolio invested in U.S. based or global stocks while "high yielding" is defined as a fund having at least a 6% annualized distribution. Combined, these funds represent some $30 billion in assets.

The funds are broken down by the three most popular income strategies that these funds use to generate income that they pass on to investors in the form of high distributions and yields. The three strategies are the option-income strategy (also called buy/write or covered-call strategy), the leveraged strategy and the dividend harvest strategy. If you are unfamiliar with how each of these strategies work, you can learn more about them at one of my earlier articles this year, available here.

The first set of tables looks at the YTD NAV and market price performances in order of NAV performance. Though many of these funds have global stock portfolios, it is difficult to use global indices for comparison, so I typically like to use the S&P 500 as a performance comparable. In my tables, I use the SPDR S&P 500 Exchange Traded fund which goes by the ticker SPY and which is the largest and most heavily traded ETF. Funds whose NAVs outperformed the S&P 500 are highlighted in green and funds that underperformed are highlighted in red.

Other table notes include:

  • Total return is defined as a fund's NAV or market price performance including all distributions simply added back, i.e. not reinvested.
  • The S&P 500 index as represented by the ETF ticker SPY also includes dividends added back, which is not usually the case with most S&P 500 quoted returns. This is why the performance of SPY is actually better in my tables than the S&P 500 returns typically cited in the media which don't include dividends.
  • Excessively high NAV yields are highlighted in red in the tables. Any NAV yield (not market price yield) over 12% I consider to be excessive and more difficult for a fund to maintain going forward.
  • High premium market prices to a fund's NAV are also highlighted in red. Sometimes a fund has a good reason to be at a premium and sometimes not. However, I consider any fund over a 20% premium as excessive no matter what the market environment or risk/reward profile.
  • High expense ratios are highlighted in red in the tables as well. Though some might consider anything over 1.5% as high, I choose 2% as a threshold. Expense ratios tend to be higher for global funds as well as leveraged funds in which leveraged expenses are included.
  • The "Fund Portfolio" column gives a general description of a fund's portfolio make-up and is not intended to be specific. Each fund has a unique set of securities and risk dependent on different sector/country weightings, option coverages, stock/bond percentages, etc.
  • All information is from CEFConnect.com, Yahoo Finance and fund sponsor fact sheets, annual reports and other public information. All information is considered reliable but not guaranteed.

The first set of tables look at YTD performance...

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The next set of tables looks at NAV and market price performance over four years, from September 30, 2007, through September 30, 2011. I chose a four-year period for a couple reasons. Going back five years or further and a lot of these funds hadn't gone public yet. Going back four years and only the ING Infrastructure, Industrials & Materials fund (NYSE:IDE) wasn't public.

Going back two years or three years would have included most of the ramp-up bull market from early 2009 but excluded most of the bear market of 2008. This would have given funds which perform better in strong markets better performance comparisons but I felt would give an unrealistic expectation of how they perform in a more difficult market environment, which I believe most investors would agree we are in. A four-year period starts at near the market high back in 2007 so it includes a full bear market cycle as well as the recovery bull market cycle. Though it is hard to say where we are right now, I think investors would rather know what to expect in a continued negative market environment.

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I hope readers find these tables of interest since I believe they provide some eye-opening results and I will be back with some specific fund comments later.

Disclosure: I am long ETV, ETB, ETW, JLA, EOS, IGD, EOI, EVT, ETO.

Additional disclosure: Short SPY, ETG, EOD, BGY

Source: Equity Closed-End Fund Third Quarter NAV And Market Price Performances