Investors of many stripes have taken it hard on the chin this year. Even for those in more obscure corners of the market, there's been no luck in ducking the blows. Closed-end funds are a case in point.

Much like mutual funds, closed-end funds pool money to invest in any number of asset classes, from fixed income to foreign stocks. The big difference is that closed-end funds don't issue new shares. Instead, a fixed number of shares are offered initially, and investors subsequently buy and sell those shares on the open market. As a result, share prices fluctuate depending on demand and other factors, meaning closed-end funds trade at either a premium or a discount to the value of the underlying assets.

Discounts are especially prevalent in today's skittish market. "Closed-end funds are out of favor," says Cecilia Gondor, executive vice president of Thomas J. Herzfeld Advisors, which specializes in researching closed-end funds. "With the credit crisis and flight to quality, investors have shied away."

Closed-end funds aren't for everyone. Many use auction-rate securities to create leverage, which is a big part of what's widened discounts. Earlier this year, auctions for these securities failed because sellers couldn't find buyers. The auction-rate market still hasn't recovered. Yet it's these discounts that make closed-end funds worth looking at now. As we head into tax-selling season at year's end, when investors sell losing positions to offset gains in order to lower their tax bills, discounts could get even wider, Gondor says.

"If there is an exposure you're looking for, whether it's high-yield or world equity, the opportunity to buy it at a discount and realize a performance boost as that discount narrows" is a lure, says Lipper analyst Jeff Tjornehoj.

With this in mind, we asked Herzfeld Advisors for some of their top picks. Below are a few deeply discounted closed-end funds that the firm rates as "buys."

This fund has historically traded at narrow discounts. But after a dividend cut in June, it fell to bargain levels in spite of an 11% monthly payout, Gondor says.

BlackRock Preferred and Equity Trust , current discount 14%

Emerging markets are losing favor, sending this fund's share price down faster than its net asset value. At -16%, Gondor says it's at its widest discount ever.

Morgan Stanley Emerging Markets Domestic Debt Fund , current discount 16%

The average discount of municipal closed-end funds is about 6%. Nuveen's is more than twice that. Not bad for a fund that pays a federally tax-exempt distribution of 5% and mainly invests in AA and AAA bonds, Gondor says.

Nuveen New York Select Quality Municipal Fund , current discount 14%

This fund, which provides exposure to high-yield securities, traded at discount levels as narrow as 5% earlier this year, Gondor says. Today it's changing hands at almost three times that now.

Advent Claymore Enhanced Growth and Income Fund , current discount 14%

While this fund's net asset value has been stable, the share price has eroded from 4% early this year to its current 16%.

LMP Corporate Loan Fund , current discount 16%