May 6, 2021

The Month in Closed-End Funds: April 2021

by Tom Roseen.

For the month, 98% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with 98% of equity CEFs and 99% of fixed income CEFs chalking up returns in the plus column. For the fourth consecutive month, Lipper’s domestic equity CEFs macro-group (+3.98%) outpaced its two equity-based brethren: world equity CEFs (+3.17%) and mixed-assets CEFs (+2.55%). The Energy MLP CEFs classification (+6.41%) for the third month in four outperformed all other equity classifications, followed by Utility CEFs (+4.93%) and Diversified Equity CEFs (+4.83%).

For the first month in four, the world income CEFs macro-group jumped to the top of the charts, posting a 2.54% return on average, followed by municipal bond CEFs (+1.54%) and domestic taxable fixed income CEFs (+1.19%). Fixed income investors continued their search for yield. They pushed Corporate Debt BBB-Rated CEFs (Leveraged) (+1.70%) to the top of the domestic taxable fixed income leaderboard for the first month in 13, followed by High Yield CEFs (Leveraged) (+1.48%) and High Yield CEFs (+1.39%).

For April, the median discount of all CEFs narrowed 62 basis points (bps) to 4.01%—narrower than the 12-month moving average median discount (7.58%). In this report, we highlight April 2021 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights

  • For the sixth month in a row, equity CEFs on average posted positive returns, rising 3.55% on a NAV basis for April, while for the second month running fixed income CEFs posted plus-side returns (+1.42%).
  • Twenty-seven percent of all CEFs traded at a premium to their NAV, with 27% of equity CEFs and 27% of fixed income CEFs trading in premium territory. The high yield CEFs macro-classification witnessed the largest narrowing of discounts for the month among Lipper’s CEF macro-groups—107 bps to 3.29%.
  • Energy MLP CEFs (+6.41%) for the third month in four posted the strongest one-month returns of the equity classifications in the CEF universe for April.
  • For the first month in four, the Emerging Markets Hard Currency Debt CEFs (+4.05%) classification posted the strongest plus-side returns in the taxable fixed income CEF universe for April.
  • The municipal bond CEF macro-group (+1.54%) posted returns in the black for the second consecutive month, with all nine classifications chalking up positive returns.

Download our Closed-End Funds FundMarket Insight Report: The Month in Closed-End Funds: April 2021 here.

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