Exercise Caution on CEFs This Week

Includes: CH, NFJ, PHK
by: Joe Eqcome

Summary: Closed end funds (CEF) on average extended their gains the week ending 3/20/09. A somewhat similar pattern of price movement played out among the fund types versus the previous week. Average price appreciation of 13 CEF fund types was 1.65%, while the unweighted average for all 648 CEFs was 1.77%. (CEFs in the aggregate YTD are down 0.3%; Distribution Yield was 12.2%; Discount to NAV was 11.3%). Preferred funds, up 14.0% the previous week, were up 4.6% the week ending March 20th. Given the swoon in financial stocks on Thursday and Friday of last week, caution regarding this group should be exercised in the upcoming week.


For the sake of weekly comparison, SPDR S&P 500 (NYSEARCA:SPY) was up 0.8%. Vanguard Total Bond (NASDAQ:BND) and iShares Muni fund (NYSEARCA:MUB) were up modestly, up 1.0% and 1.1%, respectively. Gold (NYSEARCA:GLD) edged up 2.5%, while oil, as measured by the US Oil ETF, surged 11.3% as the dollar weakened.

One big weekly CEF gainer was PIMCO High Income Fund (NYSE:PHK), up 22.3%, as it announced previous postponed dividends to be paid. One of the laggards was NFJ Dividend Fund (NYSE:NFJ), off 11.7%, after a dividend declaration was significantly off prior amounts. The Chile Fund (CH) continued its sequential weekly appreciation of 3.4% as a weaker USD bolstered commodity prices; Material Select Sector SPDR (NYSEARCA:XLB) was up 3.9%.

Disclosure: Author owns CH