Top-Rated Closed-End Funds Buy Bonds
Kevin Baker
05/26/09 - 12:12 PM EDT
The closed-end funds that won the best grades from TheStreet.com Ratings at the end of April invested in fixed income, especially municipal bonds.
We issued grades for 634 closed-end funds that had at least one year of trading history as of April 30. Of them, 311 funds earned "buy"-level ratings of B-minus or better.
The Van Kampen Bond Fund (VBF Quote), one of 23 funds we rated A-plus, has returned 14% in the year through April 30. This fund outperformed its peers by holding the investment-grade debt of Wells Fargo (WFC Quote), General Electric (GE Quote), Goldman Sachs (GS Quote) and AT&T (T Quote).
The MFS Intermediate Income Trust (MIN Quote), which gained 11%, buys debt issued by the governments of the U.S., Japan, the U.K., France, Italy and Germany. It also holds the corporate borrowings of Citigroup (C Quote) and ConocoPhillips (COP Quote).
The MFS Government Markets Income Trust(MGF Quote), another A-plus fund, gained 10.8% on a portfolio comprised mostly of Fannie Mae(FNM Quote) and Freddie Mac(FRE Quote) mortgage pools. Corporate debt from Time Warner Cable (TWC Quote), Kraft Foods (KFT Quote) and other companies made up 6% of assets, revving up returns.
Best-Rated Closed-End Funds
Fund (Ticker) Rating Reward Grade Risk Grade Objective Total Return 1 Year
Van Kampen Bond (VBF) A+ A+ B- General Bd - Investment Grade 14.04%
MFS Intermediate Income Trust (MIN) A+ A+ B Global Income 11.26%
MFS Government Markets Income Trust (MGF) A+ A+ B- Global Income 10.75%
Nuveen NY Muni Value (NNY) A+ A+ B Municipal Single State 4.87%
Western Asset Managed Municipals (MMU) A+ A+ B- Municipal - National 4.32%
Nuveen NY Select Tax-Free Inc Port (NXN) A+ A+ B Municipal Single State 3.21%
Morgan Stanley Insured Muni Bond (IMC) A+ A B Municipal - National 2.91%
Neuberger Berman CA Inter Muni Fund (NBW) A+ A B Municipal Single State 2.28%
Nuveen Select Tax-Free Inc 3 (NXR) A+ A+ B Municipal - National 2.05%
Nuveen Select T-F Inc Portf (NXP) A+ A B Municipal - National 1.54%
Source: Bloomberg & TheStreet.com Ratings
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