Closed end funds, which sold off sharply in 2008 have in many cases rallied significantly the last few months as investors, attracted by the large discounts and high yields begin to buy back into the sector.
Below are a few that are worth considering:
TSI - managed by Jeffrey Gundlach, who also runs one of the top performing open ended bond funds. TSI benefited in late 2008 because of their relatively large holdings in agency (FNM, FRE, GNM) bonds, which rose in value when Treasury and the Fed began buying MBS directly. This allowed TSI to declare a special dividend of .08 in addition to the regular dividend of .075.
NCV - Invests in convertible debt, dividends were suspended in late '08 but were resumed recently at a monthly rate of .09.
NBH - Some of the Neuberger Berman muni funds look attractive, this one is the national muni fund, NBW for example is the state specific fund for CA. These are intermediate term, and durations are around 4-5 years, and means that much of the portfolio matures in a relatively short time, allowing reinvesting of matured bonds into more attractive securities. This is in contrast to many bond funds which have very long maturities, up to 20-30 years, which means they are locked into bonds that may not be as attractive as others, and limits the ability of the fund to redeploy assets into other securities.
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