March 6, 2019

The Month in Closed-End Funds: February 2019

by Tom Roseen.

Photo Source: REUTERS/Brendan McDermid

For the month, 93% of all CEFs posted NAV-based returns in the black, with 88% of equity CEFs and 98% of fixed income CEFs chalking up returns in the plus column. For the second month in three, Lipper’s mixed-asset CEFs macro-group (+2.12%) outpaced its two equity-based brethren: world equity CEFs (+1.86%) and domestic equity CEFs (+1.52%). For the first month in six, the Growth CEFs classification (+7.46%) outperformed all the other equity classifications, followed by Developed Markets CEFs (+3.37%) and Core CEFs (+3.35%).

For the first month in four, domestic taxable fixed income CEFs jumped to the top of the leaderboard, posting a plus-side return on average (+1.44%), followed by world income CEFs (+0.89%) and municipal bond CEFs (+0.78%). All of the domestic taxable fixed income CEF classifications posted plus-side returns for the month, with Loan Participation CEFs (+1.83%), High Yield CEFs (Leverage) (+1.61%), and High Yield Funds (+1.36%) posting the strongest returns of the group. For February, the median discount of all CEFs narrowed 56 bps to 7.72%. In this report, we highlight February 2019 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the second month in a row, equity closed-end funds (CEFs) and fixed income CEFs on average witnessed a gain, rising 1.70% and 1.10%, respectively, on a net-asset-value (NAV) basis for February.
  • Only 15% of all CEFs traded at a premium to their NAV, with 18% of equity CEFs and 13% of fixed income CEFs trading in premium territory. The world income CEFs macro-classification witnessed the largest narrowing of discounts for the month among Lipper’s CEF macro-groups—186 basis points (bps) to 6.56%.
  • Growth CEFs (+7.46%) posted the strongest returns of all equity CEF classifications for the month.
  • The Loan Participation CEFs classification (+1.83%) posted the strongest plus-side returns in the fixed income universe for the month.
  • For the fourth month in a row, the municipal debt CEFs macro-group posted a plus-side return on average (+0.78%), with all classifications in the group witnessing positive returns for February.

Download our Closed-End Funds FundMarket Insight Report: The Month in Closed-End Funds: February 2019 here.

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