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February 7, 2024

The Month in Closed-End Funds: January 2024

by Tom Roseen.

For the month, 60% of all closed-end funds (CEFs) posted net-asset-value (NAV) based returns in the black, with 47% of equity CEFs and 69% of fixed income CEFs chalking up returns in the plus column. The average equity and fixed income CEF posted a NAV-based loss and gain of -0.59% and +0.49%, respectively, for January.

Lipper’s mixed-assets CEFs (+0.61%) macro-group—for the second month in a row—outpaced its two equity-based brethren: domestic equity CEFs (-0.64%) and world equity CEFs (-1.56%). The Income & Preferred Stock CEFs classification (+1.44%) moved to the top of the equity leaderboard for the first month in four, followed by Options Arbitrage/Options Strategies CEFs (+0.46%) and Energy MLP CEFs (+0.12%).

The domestic taxable bond CEFs macro-group outpaced the other two macro-groups in the fixed income universe for the first month in four, posting a 0.83% gain on average, followed by world income CEFs (+0.76%) and municipal debt CEFs (-0.16%). Investors pushed the U.S. Mortgage CEFs (+2.47%) classification to the top of the domestic taxable fixed income leaderboard for the first month in 19, followed by Loan Participation CEFs (+0.90%) and General Bond CEFs (+0.79%).

For January, the median discount of all CEFs narrowed 189 bps to 10.08%—narrower than the 12-month moving average median discount (10.96%). Equity CEFs’ median discount narrowed by 186 bps to 11.31%, while fixed income CEFs’ median discount narrowed by 198 bps to 9.14%.

In this report, we highlight January 2024 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the first month in three, equity CEFs (-0.59% on a NAV basis) suffered losses while their fixed income CEF (+0.49%) counterparts on average posted plus-side returns.
  • At month end, 11% of all CEFs traded at a premium to their NAV, with 12% of equity CEFs and 10% of fixed income CEFs trading in premium territory.
  • Income & Preferred Stock CEFs (+1.44%), for the first month in four, outpaced the other classifications in the equity CEF universe for January.
  • S. Mortgage CEFs (+2.47%), for the first month in 19, outperformed the other classifications in the domestic taxable bond CEF macro-group.
  • The domestic taxable bond CEFs macro-group (+0.83%) outperformed its world income (+0.76%) and municipal debt (-0.16%) CEF counterparts for the first month in four.

Download our Closed-End Funds FundMarket Insight Report: The Month in Closed-End Funds: January 2024 here.

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