October 6, 2020

The Month in Closed-End Funds: September 2020

by Tom Roseen.

For the month, only 35% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with a scant 17% of equity CEFs and 47% of fixed income CEFs chalking up returns in the plus column. For the first month in six, Lipper’s mixed-assets CEFs macro-group (-1.19%) mitigated losses better than its two equity-based brethren: world equity CEFs (-1.80%) and domestic equity CEFs (-3.21%). The Real Estate CEFs classification (-0.46%), for the first month in six, outperformed all other equity classifications, followed by Income & Preferred Stock CEFs (-0.97%) and Developed Markets CEFs (-1.24%). Energy MLP CEFs (-11.80%) posted the worst returns in the equity universe.

For the second month in a row, domestic taxable fixed income CEFs remained at the top of the charts, posting a 0.30% return on average, followed by municipal bond CEFs (-0.16%) and world income CEFs (-0.93%). For the second month in a row, domestic taxable fixed income CEFs remained at the top of the charts, posting a 0.30% return on average, followed by municipal bond CEFs (-0.16%) and world income CEFs (-0.93%).

For September, the median discount of all CEFs widened 80 bps to 9.36%—wider than the 12-month moving average median discount (7.97%). In this report, we highlight September 2020 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights

  • For the first month in six, equity CEFs on average posted negative returns, declining 2.56% on a NAV basis for September, while for the sixth month running, fixed income CEFs witnessed returns in the black (+0.02%).
  • Only 12% of all CEFs traded at a premium to their NAV, with 11% of equity CEFs and 14% of fixed income CEFs trading in premium territory. The municipal bond CEFs macro-classification witnessed the largest narrowing of discounts for the month among Lipper’s CEF macro-groups—13 basis points (bps) to 7.33%.
  • Real Estate Funds (-0.46%) mitigated losses better than the other equity classifications in the CEF universe for September.
  • The domestic taxable bond CEFs (+0.30%) macro-group posted the strongest plus-side returns in the CEF universe for September.
  • Energy MLP CEFs (-11.80%) suffered the largest declines of all CEF classifications for the month.

Download our Closed-End Funds FundMarket Insight Report: The Month in Closed-End Funds: September 2020 here.

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