2 Great Income Closed-End Funds

05/04/2012 8:30 am EST

Focus: FUNDS

Richard Lehmann

Publisher, Forbes/Lehmann Income Securities Investor

Here are two funds that are taking advantage of two big trends in play today, health care and municipal bonds, writes Richard Lehmann of Income Securities Investor.

Gabelli Healthcare & WellnessRx Trust (GRX) is a non-diversified, closed-end management investment company whose investment objective is long-term growth of capital through investment in equity and debt securities issued by the health care and wellness industries.

The fund’s current top five holdings are Beckman Coulter (BEC), Nestle (NSRGY), Whole Foods Market (WFM), CVS Caremark (CVS), and Mead Johnson Nutrition (MJN). Note that the definition of health care by this fund includes food.

Recently, the Board of Trustees adopted a quarterly distribution policy and declared an initial 10 cent per share cash distribution payable June 22. This fund offers medium and high-risk investors a diversification in sectors frequently overlooked but very stable. Buy at or below $8.75.

Nuveen Insured Municipal Opportunity Fund's (NIO)
This fund's primary investment objective is to seek current income exempt from regular federal income tax, and its secondary objective is the enhancement of portfolio value.

The fund invests at least 80% of its net assets in a diversified portfolio of tax-exempt municipal securities rated within the four highest categories (Baa/BBB or better), or unrated but considered to be of comparable quality. It uses leverage and may invest up to 20% of its net assets in municipal securities rated below investment quality or of comparable quality.

Currently 408 issues from 40 different states make up its $2.146 billion net assets. The fund's average daily trading volume is about 174,000 shares of its total 95.6 million shares. This fund would fit well into a taxable long-term low-risk income portfolio. Buy up to $14.90.

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