October 3, 2019

The Month in Closed-End Funds: September 2019

by Tom Roseen.

For the month, 64% of all CEFs posted NAV-based returns in the black, with 87% of equity CEFs and only 46% of fixed income CEFs chalking up returns in the plus column. For the first month in three, Lipper’s world equity CEFs macro-group (+1.53%) outperformed its two equity-based brethren: domestic equity CEFs (+1.51%) and mixed-asset CEFs (+1.29%). The Natural Resources CEFs classification (+2.78%) outperformed all other equity classifications, followed by Utility CEFs (+2.47%) and Energy MLP CEFs (+2.46%, August’s laggard).

For the third month in four, world income CEFs moved to the top of the leaderboard, posting a plus-side return on average (+0.93%), followed by domestic taxable bond CEFs (+0.39%) and municipal bond CEFs (-0.96%). The world income CEFs macro-group was propped up by the Global Income CEFs (+0.97%) and Emerging Markets Hard Currency Debt CEFs (+0.83%) classifications. For the first month in 11, the municipal debt CEFs macro-group posted a return in the red (-0.96%) on average, with all the classifications in the group experiencing negative returns for September.

For September, the median discount of all CEFs narrowed 42 bps to 6.42%—still narrower than the 12-month moving average median discount (8.21%). In this report, we highlight September 2019 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the third month in four, equity closed-end funds (CEFs) on average posted plus-side returns, gaining 1.47% on a net-asset-value (NAV) basis for September, while for the first month in nine, fixed income CEFs suffered negative returns (-0.18%).
  • Only 20% of all CEFs traded at a premium to their NAV, with 23% of equity CEFs and 18% 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—181 basis points (bps) to 5.26%.
  • Natural Resources CEFs (+2.78%) posted the strongest positive returns of all equity CEF classifications for the month.
  • The Global Income CEFs classification (+0.97%) posted the strongest plus-side returns in the fixed income universe for the month.
  • For the first month in 11, the municipal debt CEFs macro-group posted a negative return on average (-0.96%), with all classifications in the group witnessing returns in the red for September.

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

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