May 3, 2019

The Month in Closed-End Funds: April 2019

by Tom Roseen.

For the month, 89% of all CEFs posted NAV-based returns in the black, with 79% of equity CEFs and 95% of fixed income CEFs chalking up returns in the plus column. For the first month in five, Lipper’s world equity CEFs macro-group (+2.26%) outpaced its two equity-based brethren: mixed-asset CEFs (+2.08%) and domestic equity CEFs (+0.91%). For the first month in 17, the Core CEFs classification (+3.74%) outperformed all other equity classifications, followed by Growth CEFs (+3.23%) and Value CEFs (+3.18%).

All of the domestic taxable fixed income CEF classifications posted plus-side returns for the month, with Loan Participation CEFs (+1.72%, March’s laggard), High Yield CEFs (Leveraged) (+1.56%), and High Yield CEFs (+1.45%) posting the strongest returns of the group. And for the sixth consecutive month, the municipal debt CEFs macro-group posted a return in the black (+0.60%) on average, with all the classifications in the group experiencing plus-side returns for April. The median discount of all CEFs for the month narrowed 28 bps to 7.58%—still narrower than the 12-month moving average median discount (8.57%). In this report, we highlight April 2019 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the fourth month in a row, equity closed-end funds (CEFs) and fixed income CEFs on average witnessed plus-side returns, rising 1.40% and 1.01%, respectively, on a net-asset-value (NAV) basis for April.
  • Only 17% of all CEFs traded at a premium to their NAV, with 21% of equity CEFs and 14% 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—136 basis points (bps) to 6.43%.
  • Core CEFs (+3.74%) posted the strongest returns of all equity CEF classifications for the month.
  • The Loan Participation CEFs classification (+1.72%) posted the strongest plus-side returns in the fixed income universe for the month.
  • For the sixth month in a row, the municipal debt CEFs macro-group posted a plus-side return on average (+0.60%), with all classifications in the group witnessing positive returns for April.

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

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