August 3, 2018

The Month in Closed-End Funds: July 2018

by Tom Roseen.

For the month 91% of all closed-end funds (CEFs) posted net-asset-value (NAV)-based returns in the black, with 90% of equity CEFs and 91% of fixed income CEFs chalking up returns in the plus column. Q2 2018 earnings momentum in midstream and refinery-backed MLP companies, along with project updates and new expansion plans, helped Thomson Reuters Lipper’s Energy MLP CEFs classification (+6.17%) rise to the top of the equity charts for the third month in four, followed by Natural Resources CEFs (+3.66%) and Value CEFs (+3.39%). For the first month in four world income CEFs posted a plus-side return on average (+2.25%), bettering their domestic taxable bond CEFs (+0.94%) and municipal bond CEFs (+0.20%) counterparts. The world income CEFs macro-group benefitted from the strong performance of Emerging Markets Debt CEFs (+3.95%, June’s fixed income universe laggard) and Global Income CEFs (+1.47%). In this report we highlight July 2018 CEF performance trends, premiums and discounts, and corporate actions and events.Highlights:

  • For the fourth consecutive month equity CEFs witnessed a plus-side return on average, rising 2.47% on a NAV basis for July. Meanwhile, for the second month in three their fixed income CEF counterparts posted a positive return, gaining 0.66% on average for the month.
  • For July only 17% of all CEFs traded at a premium to their NAV, with 25% of equity CEFs and 11% of fixed income CEFs trading in premium territory. Municipal debt CEFs witnessed the largest narrowing of discounts for the month among Lipper’s CEF macro-groups—14 basis points to 9.56%.
  • Energy MLP CEFs (+6.17%) for the third month in four posted the strongest plus-side return of all the CEF classifications.
  • Once again, Pacific ex-Japan CEFs (-1.73%) posted the lowest return of all the CEF classifications.
  • For the third month in a row the municipal debt CEFs macro-group posted a plus-side return on average (+0.20%), with all classifications in the group witnessing gains for July.

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

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