August 5, 2019

The Month in Closed-End Funds: July 2019

by Tom Roseen.

For the month, 81% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with 61% of equity CEFs and 97% of fixed income CEFs chalking up returns in the plus column. For the second month in three, Lipper’s mixed-asset CEFs macro-group (+1.39%) outpaced its two equity-based brethren: domestic equity CEFs (-0.02%) and world equity CEFs (-0.70%). For the first month in 11, the Convertible Securities CEFs classification (+1.63%) outperformed all other equity classifications, followed by Income & Preferred Stock CEFs (+1.30%) and Diversified Equity CEFs (+0.82%).

For the second consecutive month, world income CEFs remained at the top of the leaderboard, posting a plus-side return on average (+1.03%), followed by municipal bond CEFs (+0.96%) and domestic taxable bond CEFs (+0.62%). All of the domestic taxable fixed income CEF classifications posted plus-side returns for the month, with Loan Participation CEFs (+0.79%, June’s laggard), Corporate BBB-Rated Debt CEFs (Leveraged) (+0.67%), and General Bond CEFs (+0.61%) posting the strongest returns of the group. For the ninth consecutive month, the municipal debt CEFs macro-group posted a return in the black (+0.96%) on average, with all the classifications in the group experiencing plus-side returns for July.

For July, the median discount of all CEFs narrowed 128 basis points (bps) to 5.65%—still narrower than the 12-month moving average median discount (8.41%). In this report, we highlight July 2019 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the second consecutive month, equity CEFs on average posted plus-side returns, gaining 0.11% on a NAV basis for July, while for the seventh month in a row, fixed income CEFs chalked up returns in the plus column (+0.80%).
  • Only 21% of all CEFs traded at a premium to their NAV, with 23% of equity CEFs and 20% 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—212 bps to 4.99%.
  • Convertible Securities CEFs (+1.63%) posted the strongest positive returns of all equity CEF classifications for the month.
  • The Emerging Markets Hard Currency Debt CEFs classification (+1.33%) posted the strongest plus-side returns in the fixed income universe for the month.
  • For the ninth month in a row, the municipal debt CEFs macro-group posted a plus-side return on average (+0.96%), with all classifications in the group witnessing positive returns for July.

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

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