The Month in Closed-End Funds: April 2023

For the month, 77% of closed-end funds (CEFs) posted net-asset-value (NAV)-based returns in the black, with 72% of equity CEFs and 81% of fixed income CEFs chalking up returns in the plus column.

Lipper’s world equity CEFs (+0.83%) macro-group for the second month in a row outpaced its two equity-based brethren: domestic equity CEFs (+0.65%) and mixed-assets CEFs (+0.56%). For the first month since October 2019, the Developed Markets CEFs classification (+2.24%) moved to the top of the equity leaderboard, followed by Utility CEFs (+2.13%) and Natural Resources CEFs (+2.09%).

The domestic taxable bond CEFs macro-group—for the second month in three—outpaced the other two macro-groups in the fixed income universe, posting a 0.93% gain on average, followed by world income CEFs (+0.40%) and municipal debt CEFs (-0.00%). Investors pushed High Yield CEFs (Leveraged) (+1.07%) to the top of the domestic taxable fixed income leaderboard for the first month in three, followed by Loan Participation CEFs (+0.99%) and High Yield CEFs (+0.94%).

Year to date, both equity and fixed income CEFs posted plus-side returns on a NAV-basis, rising 3.13% and 3.61%, respectively.

The median discount of all CEFs widened 53 bps to 10.62% for April—wider than the 12-month moving average median discount (8.52%). Equity CEFs’ median discount widened 90 basis points (bps) to 11.63%, while fixed income CEFs’ median discount widened 41 bps to 10.29%.

In this report, we highlight April 2023 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

• For the first month in three, equity CEFs (+0.67% on a NAV basis) on average witnessed plus-side performance while their fixed income CEF cohorts (+0.56%) posted gains for the second consecutive month.
• At month end, 12% of all CEFs traded at a premium to their NAV, with 14% of equity CEFs and 10% of fixed income CEFs trading in premium territory. The taxable bond CEFs macro-classification witnessed the smallest widening of discounts for the month among Lipper’s CEF macro-groups—18 bps to a 9.05% median discount.
• For the first month since October 2019, Developed Markets CEFs (+2.24%) outperformed the other classifications in the equity CEF universe for April.
• For the first month in three, High Yield CEFs (Leveraged) (+1.07%) outperformed the other classifications in the domestic taxable fixed income CEF universe.
• The domestic taxable bond CEFs macro-group (+0.93%) outpaced its world bond (+0.40%) and municipal debt (-0.00%) CEF counterparts.