For the month, 95% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with 94% of equity CEFs and 96% of fixed income CEFs chalking up returns in the plus column. For the fourth month in a row, Lipper’s world equity CEFs macro-group (+3.71%) outperformed its two equity-based brethren: domestic equity CEFs (+3.56%) and mixed-asset CEFs (+2.31%). For the first month in nine, the Energy MLP CEFs classification (+10.30%, November’s laggard) outperformed all other equity classifications, followed by Natural Resources CEFs (+7.52%) and Emerging Markets CEFs (+5.53%).
For the third month in four, world income CEFs jumped to the top of the leaderboard, posting a 2.59% return on average, followed by domestic taxable fixed income CEFs (+1.83%) and municipal bond CEFs (+0.36%). The world income CEFs macro-group was propped up by the Emerging Markets Hard Currency Debt CEFs (+3.82%, the strongest performing CEF classification in the fixed income universe) and Global Income CEFs (+2.11%) classifications. For the third month in a row, the municipal debt CEFs macro-group posted a plus-side return (+0.36%) on average, with all nine classifications in the group experiencing plus-side returns for December.
For December, the median discount of all CEFs narrowed 39 basis points (bps) to 5.78%—still narrower than the 12-month moving average median discount (6.97%). In this report, we highlight December 2019 CEF performance trends, premiums and discounts, and corporate actions and events.
Highlights:
- For the fourth month in a row, equity CEFs on average posted plus-side returns, gaining 3.36% on a NAV basis for December, while for the second month in a row, fixed income CEFs witnessed positive returns (+1.27%).
- Only 24% of all CEFs traded at a premium to their NAV, with 25% of equity CEFs and 23% of fixed income CEFs trading in premium territory. The single state municipal bond CEFs macro-classification witnessed the largest narrowing of discounts for the month among Lipper’s CEF macro-groups—120 bps to 7.59%.
- Energy MLP CEFs (+10.30%) posted the strongest positive returns of all equity CEF classifications for the month.
- The Emerging Markets Hard Currency Debt CEFs classification (+3.82%) posted the strongest plus-side returns in the fixed income universe for the month.
- For 2019, the average equity CEF (+19.20%) posted its strongest one-year return on a NAV basis since 2009.
Download our Closed-End Funds FundMarket Insight Report: The Month in Closed-End Funds: December 2019 here.
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