For the first month in four both equity and fixed income closed-end funds (CEFs) were in the black for January, gaining on average 4.61% and 1.11%, respectively, on a NAV basis, while gaining 6.65% and 3.24% on a market basis (for their strongest one-month return since January 2012). With many of the year-end uncertainties off the table, investors’ pent-up demand for risk-on investments moved the markets to heights not seen since before the financial meltdown. The S&P 500 closed above the 1,500 mark for the first time since late 2007 and posted its strongest January return (+5.04%) since 1997.
In the equity universe domestic equity CEFs (+5.35%), buoyed by encouraging news on the debt ceiling and earnings reports, significantly outpaced world equity CEFs (+3.74%) and mixed-asset CEFs (+3.43%). Despite a decline in gold prices, investors bid up sector equity stocks as energy issues began to advance during the month. Sector Equity Funds (December’s laggard) leapt to the head of the class, returning 7.05% for January, followed by Value Funds (+5.15%) and Core Funds (+5.04%).
Returning to their winning ways, all of Lipper’s municipal debt CEF classifications posted positive NAV-based returns for January. California Municipal Debt Funds (+1.15%) jumped to the head of the class. The municipal debt funds macro-group (+1.02%) slightly underperformed its taxable domestic CEFs counterpart (+1.30%). However, breaking a seven-month winning streak when all ten of Lipper’s taxable bond CEF classifications posted returns in the black, in January all but one classification posted plus-side returns, with Corporate Debt BBB-Rated Funds (-0.28%) posting the only return in the red. High Yield Funds (Leveraged) (+1.86%) and High Yield Funds (+1.78%) led the way for taxable domestic bond CEFs.
To read our complete FundMarket Insight Report: The Month In Closed-End Funds: January 2013, please click here.
