Equity CEFs: 6 Month NAV and Market Performance Results

By Douglas Albo: If you've read my past articles on high yielding, equity (stock) -based closed-end funds (CEFs) then you know that these funds generally use three different strategies to generate their income that they pass on to investors in the form of high distributions and yields. If you are unfamiliar with how these three income strategies work, you can read up about them here.

Douglas Albo submits: This article looks at the year-to-date and current statistics of most of the equity based high-yielding Closed-End funds available to investors, where high yield is defined as over 6%. These statistics can be quite revealing and in some cases, quite illogical and I will try and point out some of the more glaring inconsistencies at the end of the article, which may give investors opportunities for investment.

Douglas Albo submits: The accompanying table of equity based Closed End Funds (CEFs) is intended to compare the Net Asset Value (NAV) and yields of these funds since inception so that the reader can determine which funds have best preserved their NAV while maintaining a balanced income and distribution policy. These 46 funds represent the majority of high yielding equity based CEFs available to investors and collectively represent about $29 billion in assets.

By Douglas Albo: About a year ago I suggested that income investors in high yielding equity closed-end funds (CEFs) should start looking at funds which utilized an option-income strategy to generate income for their large distributions as a two-year bull run in the market was likely to give way to a more sideways market period and play more into the hands of funds which utilized an option-income strategy as opposed to other income strategies.

By Douglas Albo: One of the first articles I wrote on Seeking Alpha back on January 6, 2011, was titled, "Income Strategies For All Market Seasons" and I believe it was the first article written by any author which discussed the basic income strategies that equity based high yielding Closed-End funds (CEFs) use to generate the income they pass on to investors in the form of high distributions and yields.

By Douglas Albo: The following tables show the top market price and NAV performers Year-To-Date (YTD) of the vast majority of the high yielding (generally 6%+) equity based (50%+ stocks) Closed-End funds (CEFs) available to investors. The perfomance numbers include all distributions added back but not reinvested to give total return performances. For comparison, I have included the total return performances of four of the most popular and most heavily traded index ETFs.

By Douglas Albo: In early 2010, I wrote an article titled "CEFs: Follow The NAV" in which I advised income investors in high-yielding equity-based Closed-End funds (CEFs) that if they wanted to find the best funds to invest in, they should pay close attention to the direction of a fund's Net Asset Value (NAV).

By Douglas Albo: 2011 will go down as a difficult year for many high-yielding, equity-based closed-end funds (CEFs), as most funds either saw their discounts widen or their premiums reduced. In fact, this year has made little sense in regards to market price action, as many funds with outperforming NAVs have seen their market prices drop to their widest discounts since the bear market in 2008, while some have continued to trade at lofty premiums even with underperforming NAVs.