Doomed dinosaurs, headed for extinction.

That's what a February 2000 article in Barron's called closed-end funds.

And at the time, that assessment didn't seem far off. The crazy bull market was still raging (although just weeks from starting its steep drop).

Closed-end funds' complexity and predominant low risk income-orientation just didn't appeal to investors bent on growth.

Indeed, income and value was for the dogs.

But rumors of closed-end funds' demise may have been premature.

"The last three years have seen a significant resurgence in the industry," said Brian Smith, executive director of the Kansas City, Mo.-based Closed-End Fund Association.

The biggest sign: 28 closed-end funds were created last year, and another 40 this year. Considering there are fewer than 600 closed-end funds in the country, closed-end funds are the one-time dogs again having their day.

What they are

Part of investors' aversion to closed-end funds is that few actually know what they are.

Closed-end funds act like a combination of stocks and mutual funds. They hold a basket of other securities like mutual funds, but trade on a public exchange like stocks.

Unlike mutual funds, closed-end funds are more likely to hold bonds than stocks. Those that do hold stocks concentrate in real estate, utilities and other traditionally high dividend, nonvolatile industries.

"The personality of closed-end funds is different than open-end funds," said Don Cassidy, senior analyst at Lipper, a fund-research firm. "They have more conservative stuff proportionately than open-end funds."

And also unlike mutual funds, a closed-end fund's price can be different than the value of its underlying securities. At the stock market's peak in March 2000, closed-end fund shares were trading for 20.1 percent less than their net asset value, Mr. Cassidy said.

Today, with a renewed interest in value investing and income-producing investments, that discount has narrowed to just 7.6 percent.

Good performers

Also unlike mutual funds, closed-end funds are actually growing and performing well.

Assets in closed-end funds have grown from $134.5 billion at the end of 2000 to $146.5 billion - a 9 percent increase.

The same 18 months saw a 5 percent decline in the assets in mutual funds.

"They've generally been good performers in comparison to other benchmarks," industry spokesman Mr. Smith said.

Hence investors' renewed interest in closed-end funds. More are using them to represent a value or income portion of a well-diversified portfolio, Mr. Smith said.

"Investors who came in the last five, 10 years received a major education on asset allocation," he said. "We believe closed-end funds can and should play a role in most asset allocation programs."

Contact Amy Higgins at 768-8373; ahiggins@enquirer.com; or 312 Elm St., Cincinnati 45202. She regrets that she cannot reply to all individual questions.