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As we start 2012, what closed-end funds (CEFs) are outperforming the market so far? Price performance is a measure of how much the security has risen or dropped over a specified time period, expressed as a percentage. I use price performance to find securities that have outperformed or underperformed the market or their industry. In the case of a new year, I am using the market price performance in the last 4 weeks. This is interesting as the outperformers so far in 2012 were underperformers in 2011.

The list indicates the best price performance in the last 4 weeks were primarily CEFs trading at a discount to NAV. This is a momentum trade as a discounted CEF begins moving up the price performance leaderboard. This creates an opportunity for a potential capital gain in addition to the high distribution rates provided by CEFs. Since these CEFs started at a discount to NAV, it will take a significant price move before they become overvalued.

Among the top ten CEFs, the leading asset class was international stock funds with 4 CEFs listed: Alpine Global Premier Properties Fund (AWP); BlackRock International Growth and Income Trust (BGY); BlackRock Global Opportunities Equity Trust (BOE); and Delaware Enhanced Global Dividend & Income Fund (DEX).

Nuveen Tax-Advantaged Total Return Strategy Fund (JTA) had the highest 4-week price performance of 12.18%. JTA, a multi-asset fund, will invest at least 60% of its Managed Assets in dividend-paying common stocks that the Fund believes at the time of investment are eligible to pay dividends that qualify for favorable federal income taxation at rates applicable to long-term capital gains. It may invest up to 40% of its managed assets in securities of non-U.S. issuers that are U.S. dollar denominated and offered, traded or listed in U.S. markets. JTA is trading at $10.77 with a distribution rate of 8.1%. JTA has a 4-week price performance of 12.18%. JTA is currently trading at an 8% discount compared to a 1 month average discount of 12.85%. JTA uses 29% leverage with fees of 1.55%.

First Trust/Gallatin Specialty Finance and Financial Opportunities Fund (FGB) is a U.S. stock fund will seek to achieve its investment objectives by investing at least 80% of its Managed Assets in a portfolio of securities of specialty finance and other financial companies. FGB is trading at $6.97 with a distribution rate of 9.09%. FGB is currently trading at a 5.93% discount compared to a 1 month average discount of 9.87%. FGB uses 16% leverage. FGB has a 4-week price performance of 12.01%.

Alpine Global Premier Properties Fund (AWP) is a global real estate fund that will invest at least 80% of its managed assets in the equity and, to a lesser extent, debt securities of domestic and foreign issuers which are principally engaged in the real estate industry or real estate financing or which control significant real estate assets. AWP has a 4-week price performance of 10.80%. AWP is trading at $5.88 with a distribution rate of 10.26%. AWP is currently trading at a 14.8% discount compared to a 1 month average discount of 16.80%. AWP uses low leverage of 5.68% with an expense ratio of 1.25%.

Western Asset High Yield Defined Opportunity Fund Inc. (HYI) will invest at least 80% of its net assets in a portfolio of high-yield corporate fixed income securities rated below investment grade. The Fund may also invest up to 20% of its net assets in fixed income securities issued by U.S or foreign governments, agencies, and instrumentalities and/or fixed income securities that are investment grade quality. HYI is trading at $18.37 with a distribution rate of 9.69%. HYI is currently trading at a 5.6% premium compared to a 1 month average discount of 3.21%. HYI does not use leverage and has an expense ratio of 0.93%. HYI has a 4-week price performance of 10.43%.

Nuveen Mortgage OpportunityTerm Fund (JLS) will invest at least 80% of its Managed Assets in MBS, consisting primarily of non-agency RMBS and CMBS, directly and indirectly by investing in the Feeder PPIP Fund. JLS is trading at $22.25 with a distribution rate of 9.33%. JLS is currently trading at a 1.2% discount compared to a 1 month average discount of 7.04%. JLS does not use leverage and has an expense ratio of 1.30%.

NASDAQ Premium Income and Growth Fund Inc.(QQQX) intends to pursue its investment objective principally through a two-part strategy, namely The NASDAQ Investment Portfolio and The Option Strategies. Firstly, the Fund will invest substantially all of its net assets in a portfolio of investments (NASDAQ Investment Portfolio) designed to closely track the performance, before fees and expenses, of the NASDAQ 100¬ Index. Secondly, in attempting to generate premium income and reduce the volatility of the Funds returns, with the intent of improving the Funds risk-adjusted returns, the Fund will write (sell) call options on the Index (Written Options) that are fully collateralized by the NASDAQ Investment Portfolio. QQQX is trading at $14.12 with a distribution rate of 8.56%. QQQX is currently trading at a 5.9% discount compared to a 1 month average discount of 7.65%. QQQX does not use leverage and has an expense ratio of 1.08%.

Nuveen Real Estate Income Fund (JRS) will invest at least 90% of its total assets in income producing common stocks, preferred stocks, convertible preferred stocks and debt securities issued by real estate companies; at least 80% of its total assets in income producing equity securities issued by REITs; and will not invest more than 25% of its total assets in non-investment grade preferred stocks, convertible preferred stocks and debt securities and 10% of its total assets in illiquid real estate securities. JRS is trading at $10.80 with a distribution rate of 8.49%. JRS is currently trading at a 7.65% premium compared to a 1 month average premium of 8.30%. JRS uses leverage of 28% and has an expense ratio of 1.48%.

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Source: 7 CEFs Outperforming The Market In The New Year