December 5, 2017

The Month in Closed-End Funds: November 2017

by Tom Roseen

For November 48% of all CEFs posted NAV-based returns in the black, with 71% of equity CEFs and only 30% of fixed income CEFs chalking up returns in the plus column. Perhaps as a result of a more subdued view for 2018 interest rate hikes after the release of the FOMC’s October/November meeting minutes, interest rate-sensitive securities got a little bump in November, with the Utility CEFs classification (+2.50%) jumping to the top of the equity charts for the first month in nine. For the twelfth month in a row domestic taxable bond CEFs (+0.06%) posted a plus-side return on average, outpacing municipal bond CEFs (-0.45%) but underperforming world income CEFs (+0.17%). The Emerging Markets Debt CEFs (+0.24%) and Global Income CEFs (+0.14%) classifications helped propel the world income macro-group to the top of the podium. In this report we highlight November 2017 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the third month in a row equity closed-end funds (CEFs) witnessed a plus-side return on average, rising 0.78% on a net-asset-value (NAV) basis for November, while for the second month in three their fixed income CEF counterparts posted a return in the red, losing 0.18%.
  • For November only 16% of all CEFs traded at a premium to their NAV, with 13% of equity CEFs and 18% of fixed income CEFs trading in premium territory. Thomson Reuters Lipper’s single-state municipal debt CEFs macro-group witnessed the largest narrowing of discounts for the month—54 basis points (bps) to 6.16%.
  • Utility CEFs (+2.50%) and Core CEFs (+2.42%) posted the strongest returns in the equity universe, propping up the domestic equity CEFs (+0.94%) macro-group.
  • A relatively strong return from Emerging Markets Debt CEFs (+0.24%) and Global Income CEFs (+0.14%) pushed the world income CEFs macro-group (+0.17%) to the head of the fixed income class.
  • None of Lipper’s municipal debt CEF classifications posted returns in the black for November, with High Yield Municipal Debt CEFs (-0.09%) mitigating losses better than the other classifications in the group.

Download our Closed-End Funds FundMarket Insight Report: The Month in Closed-End Funds: November 2017 here.

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