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September 7, 2023

The Month in Closed-End Funds: August 2023

by Tom Roseen.

For the month, 34% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with just 13% of equity CEFs and 49% of fixed income CEFs chalking up returns in the plus column. The average equity and fixed income CEF posted NAV-based losses of 1.98% and 0.54%, respectively, for August.

Lipper’s mixed-assets CEFs (-1.26%) macro-group, for the first month in four, mitigated losses better than its two equity-based brethren: domestic equity CEFs (-1.73%) and world equity CEFs (-3.39%). The Energy MLP CEFs classification (-0.59%) moved to the top of the equity leaderboard, for the first month in 12, followed by Income & Preferred Stock CEFs (-0.61%) and Natural Resources CEFs (-1.09%).

Year to date, both equity and fixed income CEFs chalked up plus-side returns on a NAV basis, rising 5.74% and 5.08%, respectively.

The domestic taxable bond CEFs macro-group—for the first month in three—outpaced the other two macro-groups in the fixed income universe, posting a 0.60% gain on average, followed by world income CEFs (-0.36%) and municipal debt CEFs (-2.39%). Investors pushed Loan Participation CEFs (+1.26%) to the top of the domestic taxable fixed income leaderboard for the first month in six, followed by General Bond CEFs (+0.63%) and High Yield CEFs (+0.42%).

The median discount of all CEFs widened 49 bps to 10.64% for August—wider than the 12-month moving average median discount (9.81%). Equity CEFs’ median discount widened by 47 bps to 11.88%, while fixed income CEFs’ median discount widened by 42 bps to 9.85%.

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

Highlights:

  • For the first month in three, both equity (-1.98% on a NAV basis) and fixed-income CEFs (-0.54%) on average suffered losses.
  • At month end, 12% of all CEFs traded at a premium to their NAV, with 13% of equity CEFs and 11% of fixed income CEFs trading in premium territory. The national municipal debt CEFs macro-classification witnessed the largest widening of discounts for the month among Lipper’s CEF macro-groups—263 bps to a 13.68% median discount.
  • Energy MLP CEFs (-0.59%), for the first month in 12, mitigated losses better than the other classifications in the equity CEF universe for August.
  • Loan Participation CEFs (+1.26%), for the first month in six, outperformed the other classifications in the domestic taxable fixed income CEF universe.
  • The domestic taxable bond CEFs macro-group (+0.60%) outpaced its world income (-0.36%) and municipal debt (-2.39%) CEF counterparts for the first month in three.

Download our Closed-End Funds FundMarket Insight Report: The Month in Closed-End Funds: August 2023 here.

LSEG Lipper delivers data on more than 330,000 collective investments in 113 countries. Find out more.

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