March 6, 2018

The Month in Closed-End Funds: February 2018

by Tom Roseen.

For the month only 8% of all CEFs posted NAV-based returns in the black, with 3% of equity CEFs and 12% of fixed income CEFs chalking up returns in the plus column. A move to less risky assets helped related CEF classifications mitigate losses better than other classifications for February. Convertible Securities CEFs (-1.82%) jumped to the top of the equity charts for the first month in 34. For the first month in 15 domestic taxable bond CEFs posted a negative return on average (-0.52%), mitigating losses better than their world income CEFs (-1.44%) and municipal bond CEFs (-0.58%) counterparts. In this report we highlight February 2018 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the first month in six equity closed-end funds (CEFs) witnessed a negative return on average, declining 4.65% on a net-asset-value (NAV) basis for February, while for the second month in a row their fixed income CEF counterparts posted a negative return, losing 0.61% on average for the month.
  • For February only 14% of all CEFs traded at a premium to their NAV, with 18% of equity CEFs and 11% of fixed income CEFs trading in premium territory. World income CEFs witnessed the largest narrowing of discounts for the month among Thomson Reuters Lipper’s macro-groups—118 basis points (bps) to 6.75%.
  • Loan Participation CEFs (+0.02%) posted the only plus-side return of all the CEF classifications.
  • Convertible Securities CEFs (-1.82%) jumped to the top of the equity charts for the first month in 34.
  • For the second month in a row the municipal debt CEFs macro-group posted a negative return (-0.58%), with none of the classifications in the group witnessing a plus-side return.

Download our Closed-End Funds FundMarket Insight Report: The Month in Closed-End Funds: February 2018 here.

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