November 4, 2021

The Month in Closed-End Funds: October 2021

by Tom Roseen.

For the month, only 60% of all closed-end funds (CEFs) posted net-asset-value (NAV)-based returns in the black, with 88% of equity CEFs and just 39% of fixed income CEFs chalking up returns in the plus column. For the first month in five, Lipper’s domestic equity CEFs (+4.39%) macro-group outpaced its two equity-based brethren: world equity CEFs (+2.45%) and mixed-assets CEFs (+1.60%). The Energy MLP CEFs classification (+7.19%, September’s leader) for the second consecutive month outperformed all other equity classifications, followed by Natural Resources CEFs (+7.19%) and Diversified Equity CEFs (+4.91%).

For the second month in a row, the domestic taxable fixed income CEFs macro-group chalked up the strongest returns in the fixed income universe, posting a 0.04% return on average, followed by municipal bond CEFs (-0.32%) and world income CEFs (-0.55%). Fixed income investors remained slightly more risk seeking during the month. They pushed High Yield CEFs (+0.40%) to the top of the domestic taxable fixed income leaderboard for the first month in seven, followed by Loan Participation CEFs (+0.32%) and Corporate Debt BBB-Rated CEFs (+0.01%).

For October, the median discount of all CEFs narrowed nine basis points (bps) to 2.31%—still narrower than the 12-month moving average median discount (4.11%). In this report, we highlight October 2021 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights

  • For the eleventh month in 12, equity CEFs on average witnessed plus-side returns, rising 3.48% on a NAV basis for October, while for the second consecutive month fixed income CEFs posted returns in the red (-0.14%).
  • Thirty-six percent of all CEFs traded at a premium to their NAV, with 34% of equity CEFs and 39% of fixed income CEFs trading in premium territory.
  • Energy MLP CEFs (+7.19%) for the second month in a row posted the strongest one-month returns of the equity classifications in the CEF universe for October.
  • For the first month in seven, the High Yield CEFs (+0.40%) classification posted the strongest plus-side returns in the domestic taxable fixed income CEF macro-group for October.
  • The municipal bond CEF macro-group (-0.32%) posted a loss for the third month in row, with eight of the nine classifications experiencing negative returns.

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

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