Stay Away From These Closed-End Funds

A truism made more valid today: Investing is not for the faint of heart. Most of the top-performing closed-end funds in August have crashed in the past few days.

Two that I would not touch have ties to energy. At 13.7%, no fund on the list did better than Tortoise Energy Capital. With oil dropping to the $90s, the prospects for its holdings of Kinder Morgan , Plains All American, Enbridge Energy and Sunoco Logistics have gone south as well.

The other is from the emerging-market-income category. The Western Asset Emerging Markets Floating Rate Fund added 8.5% in August before giving it all back this month.

Half the fund's investments are in the sovereign debt of oil-rich countries like Mexico, Brazil, Venezuela and Egypt. A total of 44.5% of its holdings are allocated to corporate debt including HSBC Bank, Gazprom and Mexico's Pemex.

While there are no safe bets in this market, the month-to-date beating taken by Eagle Capital Growth Fund has left it trading at a discount to net asset value of almost 10%. That's not a bad way to purchase some of its top holdings, Johnson & Johnson, Colgate-Palmolive, PepsiCo, and Sysco, all of which have held up well.

Best Performing Closed-End Fund for Each Objective in August

Objective
Fund (Ticker) Rating
August 2008 Total Return

Corporate - High Yield
BlackRock Debt Strategies Fund Inc (DSU) C
4.52%

Corporate - Investment Grade
Rivus Bond Fund (BDF) C+
3.44%

Emerging Market Equity
Templeton Emerging Markets Fd (EMF) C+
-7.22%

Emerging Market Income
Western Asset Emerg Mkts Fltg (EFL) B+
8.52%

Equity Income
J Hancock Preferred Income III (HPS) D+
7.40%

General Bd - Investment Grade
BlackRock Income Opportunity Trust (BNA) C+
2.72%

General Mortgage
PIMCO Strategic Glob Gov Fund (RCS) C-
8.54%

Global Equity
Gabelli Global Deal Fund (GDL) C+
4.21%

Global Income
AllianceBernstein Global High Inc (AWF) B+
4.01%

Government Bond
BlackRock Enhanced Government (EGF) C-
2.98%

Growth - Domestic
Eagle Capital Growth Fund (GRF) C-
9.23%

Growth & Income
The Cushing MLP Total Return Fund (SRV) U
7.32%

Loan Participation
Eaton Vance Credit Opportunities (EOE) D
3.94%

Multi-Sector Bond
Highland Credit Strategies Fund (HCF) D
2.95%

INSERT
Nuveen Muni High Income Opport 2 (NMD) U
2.98%

Municipal - National
Morgan Stanley Muni Inc Opp (OIA) C+
6.01%

Municipal Single State
Eaton Vance Insured MA Muni Bond (MAB) D+
7.40%

Non-US Equity
India Fund (IFN) C+
0.32%

Sector - Energy/Natural Res
Tortoise Energy Capital (TYY) C-
13.68%

Sector - Financial Services
First Trust/Gallatin Spl Fin & Finl (FGB) E-
4.89%

Sector - Health/Biotechnology
BlackRock Health Sciences Trust (BME) B+
3.11%

Sector - Precious Metals
Gabelli Global Gold Nat Res&Income (GGN) B+
-5.19%

Sector - Utilities
DNP Select Income Fund Inc (DNP) B-
3.15%

Source: TheStreet.com Ratings

As with any trade, you can lose money. Remember to place stop-loss orders to help protect you from sudden moves against positions.