The Month in Closed-End Funds: November 2020

For the month, 99% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with 99% of equity CEFs and 98% of fixed income CEFs chalking up returns in the plus column. For the first month in three, Lipper’s world equity CEFs macro-group (+11.64%) outpaced its two equity-based brethren: domestic equity CEFs (+9.88%) and mixed-assets CEFs (+7.92%). The Energy MLP CEFs classification (+19.34%) for the second consecutive month outperformed all other equity classifications, followed by Natural Resources CEFs (+16.97%) and Developed Markets CEFs (+14.28%, October’s laggard). Real Estate CEFs (+3.70%) posted the weakest returns in the equity universe.

For the first month in four, world income CEFs moved to the top of the charts, posting a 5.14% return on average, followed by domestic taxable fixed income CEFs (+3.97%) and municipal bond CEFs (+2.68%). Fixed income investors were generally more risk seeking and in search of yield during the month, pushing High Yield CEFs (Leveraged) (+4.62%) to the top of the domestic taxable fixed income leaderboard for the first month in four, followed by General Bond CEFs (+4.37%) and High Yield CEFs (+4.09%).

For November, the median discount of all CEFs narrowed 260 bps to 7.40%—narrower than the 12-month moving average median discount (8.38%). In this report, we highlight November 2020 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights

• For the first month in three, equity CEFs on average posted positive returns, rising 9.86% on a NAV basis for November, while for the eighth month in a row, fixed income CEFs witnessed returns in the black (+3.51%).
• Sixteen percent of all CEFs traded at a premium to their NAV, with 13% of equity CEFs and 18% of fixed income CEFs trading in premium territory.
• Energy MLP Funds (+19.34%) posted the strongest one-month returns of the equity classifications in the CEF universe for November.
• For the first month in three, the world income CEFs (+5.14%) macro-group posted the strongest plus-side returns in the fixed income CEF universe for November.
• The municipal bond CEF macro-group (+2.68%) posted plus-side returns for the first month in four, with all nine classifications posting returns in the black.