February 5, 2019

The Month in Closed-End Funds: January 2019

by Tom Roseen.

Photo Source: REUTERS/Leah Millis

For the month, 98% of all CEFs posted NAV-based returns in the black, with 97% of equity CEFs and 99% of fixed income CEFs chalking up returns in the plus column. For the first month in six, the Energy MLP CEFs classification (+18.25%, December’s cellar dweller) handily outperformed all the other equity classifications, followed by Natural Resources CEFs (+12.47%) and Growth CEFs (+10.58%). For the first month in four, world income CEFs jumped to the top of the leaderboard, posting a plus-side return on average (+4.25%), followed by domestic taxable fixed income CEFs (+3.23%) and municipal bond CEFs (+0.73%). The world income CEFs macro-group was propelled to the head of the class by strong performance from Emerging Markets Debt CEFs (+6.10%) and Global Income CEFs (+3.38%). For January, the median discount of all CEFs narrowed 369 bps to 8.28%. In this report, we highlight January 2019 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the second month in three, equity closed-end funds (CEFs) and fixed income CEFs on average witnessed a gain, rising 8.27% and 2.17%, respectively, on a net-asset-value (NAV) basis for January.
  • Only 14% of all CEFs traded at a premium to their NAV, with 19% of equity CEFs and 10% of fixed income CEFs trading in premium territory. The municipal debt CEFs macro-classification witnessed the largest narrowing of discounts for the month among Lipper’s CEF macro-groups— 488 basis points (bps) to 8.35%.
  • Energy MLP CEFs (+18.25%) posted the strongest returns of all equity CEF classifications for the month.
  • The Emerging Markets Debt CEF classification (+6.10%) posted the strongest plus-side returns in the fixed income universe for the month.
  • For the third month in a row, the municipal debt CEFs macro-group posted a plus-side return on average (+0.73%), with all classifications in the group witnessing positive returns for January.

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

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