January 4, 2018

The Month in Closed-End Funds: December 2017

by Tom Roseen

For the month of December 91% of all CEFs posted NAV-based returns in the black, with 83% of equity CEFs and 98% of fixed income CEFs chalking up returns in the plus column. Excepting Utility CEFs (-1.86%), all equity CEF classifications benefitted from the positive stock environment and the passage of the tax reform bill in December, with the Energy MLP CEFs classification (+7.87%, November’s laggard) jumping to the top of the equity charts for the first month in 12. For the thirteenth month in a row domestic taxable bond CEFs (+0.62%) posted a plus-side return on average but underperformed their municipal bond CEFs (+1.31%) and world income CEFs (+0.73%) cohorts. In this report we highlight December 2017 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights

  • For the fourth month in a row equity closed-end funds (CEFs) witnessed a plus-side return on average, rising 1.86% on a net-asset-value (NAV) basis for December, while for the second month in three their fixed income CEF counterparts posted a return in the black, gaining 0.97%.
  • For December only 16% of all CEFs traded at a premium to their NAV, with 17% of equity CEFs and 16% of fixed income CEFs trading in premium territory. Thomson Reuters Lipper’s domestic equity CEFs macro-group witnessed the largest narrowing of discounts for the month—123 basis points (bps) to 4.05%.
  • Energy MLP CEFs (+7.87%) and Natural Resources CEFs (+6.82%) posted the strongest returns in the equity universe, propping up the domestic equity CEFs macro-group (+2.25%).
  • For 2017 equity CEFs (+14.35%) and fixed income CEFs (+7.98%) easily outpaced their 2016 returns.
  • All Lipper municipal debt CEF classifications posted returns in the black for December, with New Jersey Municipal Debt CEFs (+1.39%) and New York Municipal Debt CEFs (+1.39%) outperforming the other classifications in the group.

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

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