October 6, 2021

The Month in Closed-End Funds: September 2021

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 31% of equity CEFs and 38% of fixed income CEFs chalking up returns in the plus column. For the third month in four, Lipper’s mixed-assets CEFs (-0.87%) macro-group mitigated losses better than its two equity-based brethren: domestic equity CEFs (-1.38%) and world equity CEFs (-3.17%). The Energy MLP CEFs classification (+3.26%, August’s laggard) for the first month in three outperformed all other equity classifications, followed by Natural Resources CEFs (+2.84%) and Real Estate CEFs (+0.24%).

For the first month in three, the domestic taxable fixed income CEFs macro-group posted the strongest returns in the fixed income universe, posting a 0.24% return on average, followed by municipal bond CEFs (-1.19%) and world income CEFs (-1.23%). Fixed income investors remained slightly more risk seeking during the month. They pushed Loan Participation CEFs (+0.71%) to the top of the domestic taxable fixed income leaderboard for the first month in eight, followed by General Bond CEFs (+0.35%) and High Yield CEFs (+0.17%).

For September, the median discount of all CEFs widened 82 basis points (bps) to 2.40%—still narrower than the 12-month moving average median discount (4.75%). In this report, we highlight September 2021 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights

  • For the first month in 11, equity CEFs on average suffered losses, declining 1.64% on a NAV basis for September, while for the first month seven fixed income CEFs posted returns in the red (-0.39%).
  • Thirty-three percent of all CEFs traded at a premium to their NAV, with 28% of equity CEFs and 36% of fixed income CEFs trading in premium territory.
  • Energy MLP CEFs (+3.26%) for the first month in three posted the strongest one-month returns of the equity classifications in the CEF universe for September.
  • For the first month in eight, the Loan Participation CEFs (+0.71%) classification posted the strongest plus-side returns in the domestic taxable fixed income CEF macro-group for September.
  • The municipal bond CEF macro-group (-1.19%) posted a loss for the second month in row, with all nine classifications experiencing negative returns.

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

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