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June 5, 2018

The Month in Closed-End Funds: May 2018

by Tom Roseen.

For the month 78% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with 74% of equity CEFs and 81% of fixed income CEFs chalking up returns in the plus column. A move toward out-of-favor energy-related assets helped the Energy MLP CEFs classification (+5.90%) remain at the top of the equity charts for the second month in a row, followed by Growth CEFs (+4.49%) and Natural Resources CEFs (+3.01%). For the second month in three municipal bond CEFs posted a plus-side return on average (+1.58%), bettering their domestic taxable bond CEFs (+0.27%) and world income CEFs (-2.10%) counterparts. In this report we highlight May 2018 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the second consecutive month equity CEFs witnessed a plus-side return on average, rising 1.33% on a NAV basis for May, while for the second month in three their fixed income CEF counterparts posted a positive return, rising 0.76% on average for the month.
  • For May only 16% of all CEFs traded at a premium to their NAV, with 24% of equity CEFs and 10% of fixed income CEFs trading in premium territory. World Income CEFs witnessed the largest narrowing of discounts for the month among Lipper’s CEF macro-groups—156 basis points (bps) to 6.40%.
  • Once again Energy MLP CEFs (+5.90%) posted the strongest plus-side return of all the CEF classifications.
  • Emerging Markets Debt CEFs (-4.30%) posted the lowest return of all the CEF classifications.
  • For the second month in three the municipal debt CEFs macro-group posted a plus-side return on average (+1.58%), with all classifications in the group witnessing gains for May.

Download our Closed-End Funds FundMarket Insight Report: The Month in Closed-End Funds: May 2018 here.

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