July 3, 2019

The Month in Closed-End Funds: June 2019

by Tom Roseen.

For the month, 95% of all closed-end funds posted NAV-based returns in the black, with 97% of equity CEFs and 94% of fixed income CEFs chalking up returns in the plus column. For the second month in three, Lipper’s world equity CEFs macro-group (+4.97%) outpaced its two equity-based brethren: domestic equity CEFs (+3.93%) and mixed-assets CEFs (+3.74%). For the second month in three, the Diversified Equity CEFs classification (+6.12%) outperformed all other equity classifications, followed by Sector Equity CEFs (+5.55%) and Global CEFs (5.39%).

For the first month in five, world income CEFs jumped to the top of the leaderboard, posting a plus-side return on average (+3.21%), followed by domestic taxable bond CEFs (+1.18%) and municipal bond CEFs (+0.48%). All of the domestic taxable fixed income CEF classifications posted plus-side returns for the month, with Corporate Debt BBB-Rated CEFs (Leveraged) (+2.55%), Corporate Debt BBB-Rated CEFs (+2.17%), and High Yield CEFs (Leveraged) (+2.04%) posting the strongest returns of the group. For the eighth consecutive month, the municipal debt CEFs macro-group posted a return in the black (+0.48%) on average, with all the classifications in the group experiencing plus-side returns for June.

For June, the median discount of all CEFs narrowed 119 bps to 6.93%—still narrower than the 12-month moving average median discount (8.58%). In this report, we highlight June 2019 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the fifth month in six, equity closed-end funds (CEFs) on average posted plus-side returns, gaining 4.16% on a net-asset-value (NAV) basis for June, while for the sixth month in a row, fixed income CEFs chalked up returns in the plus column (+1.02%).
  • Only 18% of all CEFs traded at a premium to their NAV, with 20% of equity CEFs and 16% of fixed income CEFs trading in premium territory. The taxable bond CEFs macro-classification witnessed the largest narrowing of discounts for the month among Lipper’s CEF macro-groups—167 basis points (bps) to 6.58%.
  • Diversified Equity CEFs (+6.12%) posted the strongest positive returns of all equity CEF classifications for the month.
  • The Emerging Markets Hard Currency Debt CEFs classification (+3.99%) posted the strongest plus-side returns in the fixed income universe for the month.
  • For the eighth month in a row, the municipal debt CEFs macro-group posted a plus-side return on average (+0.48%), with all classifications in the group witnessing positive returns for June.

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

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