For the month, 92% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with 88% of equity CEFs and 94% of fixed income CEFs chalking up returns in the plus column. The average equity and fixed income CEF posted NAV-based returns of 3.57% and 1.63%, respectively, for June.
Lipper’s world equity CEFs macro-group (+4.44%) for the third month in four outpaced or mitigated losses better than its two equity-based brethren: domestic equity CEFs (+3.43%) and mixed-assets CEFs (+3.11%). For the first month in eight, the Natural Resources CEFs classification (+6.29%) moved to the top of the equity leaderboard, followed by Energy MLP CEFs (+6.15%) and Diversified Equity CEFs (+5.10%).
The world income CEFs macro-group—for the second month in a row—outpaced or mitigated losses better than the other two macro-groups in the fixed income universe, posting a 2.17% gain on average, followed by municipal debt CEFs (+1.65%) and domestic taxable bond CEFs (+1.50%). Investors pushed High Yield CEFs (+2.63%) to the top of the domestic taxable fixed income leaderboard for the first month in six, followed by Loan Participation CEFs (+1.78%) and High Yield (Leveraged) CEFs (+1.72%).
For Q2, both equity and fixed income CEFs posted plus-side returns on a NAV basis, rising 2.22% and 1.51%, respectively.
The median discount of all CEFs narrowed 76 bps to 10.79% for June—wider than the 12-month moving average median discount (9.16%). Equity CEFs’ median discount narrowed by 64 basis points (bps) to 11.92%, while fixed income CEFs’ median discount narrowed by 91 bps to 10.10%.
In this report, we highlight June 2023 CEF performance trends, premiums and discounts, and corporate actions and events.
Highlights:
- For the second month in three, equity CEFs (+3.57% on a NAV basis) on average chalked up plus-side performance while their fixed income CEF cohorts (+1.63%) posted gains for the third month in four.
- At month end, 11% of all CEFs traded at a premium to their NAV, with 13% of equity CEFs and 10% of fixed income CEFs trading in premium territory. The domestic equity CEFs macro-classification witnessed the largest narrowing of discounts for the month among Lipper’s CEF macro-groups—133 bps to a 10.55% median discount.
- For the first month in eight, Natural Resources CEFs (+6.29%) outperformed the other classifications in the equity CEF universe for June.
- For the first month in six, High Yield CEFs (+2.63%) outperformed or mitigated losses better than the other classifications in the domestic taxable fixed income CEF universe.
- Once again, the world bond CEFs macro-group (+2.17%) outpaced its municipal debt (+1.65%) and domestic taxable bond (+1.50%) CEF counterparts.
Download our Closed-End Funds FundMarket Insight Report: The Month in Closed-End Funds: June 2023 here.
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