The Month in Closed-End Funds: June 2021

For the month, 84% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with 73% of equity CEFs and 93% of fixed income CEFs chalking up returns in the plus column. For the first month in eight, Lipper’s mixed-assets CEFs (+1.69%) macro-group outpaced its two equity-based brethren: domestic equity CEFs (+1.65%) and world equity CEFs (+0.03%). The Energy MLP CEFs classification (+4.82%) for the third month in row outperformed all other equity classifications, followed by Convertible Securities CEFs (+3.33%, May’s laggard) and Natural Resources CEFs (+2.35%).

For the first month in four, the domestic taxable fixed income CEFs macro-group posted the strongest returns in the fixed income universe, posting a 0.90% return on average, followed by municipal bond CEFs (+0.83%) and world income CEFs (+0.66%). Fixed income investors continued their search for yield. They pushed Corporate Debt BBB-Rated CEFs (+1.43%) to the top of the domestic taxable fixed income leaderboard for the first month in 15, followed by Corporate Debt BBB-Rated CEFs (Leveraged) (+1.35%) and High Yield CEFs (Leveraged) (+1.07%).

For June, the median discount of all CEFs narrowed 38 basis points (bps) to 2.42%—narrower than the 12-month moving average median discount (6.48%). In this report, we highlight June 2021 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights

• For the eighth month in a row, equity CEFs on average posted positive returns, rising 1.34% on a NAV basis for June, while for the fourth month running fixed income CEFs posted plus-side returns (+0.85%).
• Thirty-two percent of all CEFs traded at a premium to their NAV, with 31% of equity CEFs and 33% of fixed income CEFs trading in premium territory. The domestic equity CEFs macro-classification witnessed the largest widening of discounts for the month among Lipper’s CEF macro-groups—112 bps to 2.90%.
• Energy MLP CEFs (+4.82%) for the third month in row posted the strongest one-month returns of the equity classifications in the CEF universe for June.
• For the first month in 15, the Corporate Debt BBB-Rated CEFs (+1.43%) classification posted the strongest plus-side returns in the taxable fixed income CEF universe for June.
• The municipal bond CEF macro-group (+0.83%) posted returns in the black for the fourth consecutive month, with all nine classifications chalking up positive returns.