The Month in Closed-End Funds: March 2023

For the month, 60% of all closed-end funds (CEFs) posted net-asset-value (NAV)-based returns in the black, with just 53% of equity CEFs and 65% of fixed income CEFs chalking up returns in the plus column.

Lipper’s world equity CEFs (+1.63%) macro-group outpaced its two equity-based brethren for the second month in three: domestic equity CEFs (+0.21%) and mixed-assets CEFs (-3.87%). For the first month in 15, the Utility CEFs classification (+2.93%, February’s laggard) moved to the top of the equity leaderboard, followed by Options Arbitrage/Options Strategies CEFs (+2.52%) and Developed Markets CEFs (+2.28%).

The municipal debt CEFs macro-group—for the second month in three—outpaced the other macro-groups in the fixed income universe, posting a 2.48% gain on average, followed by world income CEFs (+0.12%) and domestic taxable bond CEFs (-0.03%). For the first month in four, investors pushed Corporate Debt BBB-Rated (Unleveraged) CEFs (+1.57%) to the top of the domestic taxable fixed income leaderboard, followed by Corporate Debt BBB-Rated (Leveraged) CEFs (+1.57%) and High Yield CEFs (+0.12%).

Both equity and fixed income CEFs posted plus-side returns on a NAV-basis for the quarter, rising 2.42% and 3.06%, respectively.

The median discount of all CEFs widened 148 bps to 10.08% for March—wider than the 12-month moving average median discount (8.30%). Equity CEFs’ median discount widened 108 bps to 10.73%, while fixed income CEFs’ median discount widened 169 bps to 9.88%.

In this report, we highlight March 2023 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

• For the second consecutive month, equity CEFs (-0.26% on a NAV basis) on average witnessed negative performance while their fixed income CEF cohorts (+0.87%) posted gains for the second month in three.
• At month end, 13% of all CEFs traded at a premium to their NAV, with 18% of equity CEFs and 9% of fixed income CEFs trading in premium territory. The high yield CEFs macro-classification witnessed the largest widening of discounts for the month among Lipper’s CEF macro-groups—292 bps to an 8.25% median discount.
• Utility CEFs (+2.93%), for the first month in 15, outperformed the other classifications in the equity CEF universe for March.
• Corporate Debt BBB-Rated CEFs (+1.57%) outperformed the other classifications in the domestic taxable fixed income CEF universe for the first month in four.
• The municipal debt CEFs macro-group (+2.48%) outpaced its world bond (+0.12%) and domestic taxable bond (-0.03%) CEF counterparts.