A combination of over-supply and tax-loss selling has sent many closed-end funds plummeting [subscription required] to substantial discounts to the value of their underlying assets. According to the Wall Street Journal, "On average, shares now trade 6.6% below the value of their underlying assets. In contrast, over the past 10 years, shares usually sold for 4% below the funds' net asset value, according to research by Wachovia Securities."

Investor unease about the credit market and a desire to take losses for tax purposes may be a contributing factor.

If you're looking to invest in closed-end funds, you might be able to take advantage of the valuation discounts caused by, at least in part, temporary factors. You can use this screener to search for funds that interest you.

Evaluating closed-end funds isn't all that different from evaluating other funds: Look for a modest expense ratio with an investment focus that interests you. And, when possible, buying them at a discount to their underlying assets is a good way to increase your chances of a good return.