September 6, 2018

The Month in Closed-End Funds: August 2018

by Tom Roseen.

For the month 80% of all closed-end funds (CEFs) posted net-asset-value (NAV)-based returns in the black, with 73% of equity CEFs and 85% of fixed income CEFs chalking up returns in the plus column. Strong returns from the likes of Apple and other tech stalwarts helped the Growth CEFs classification (+7.46%) rise to the top of the equity charts for the first month in 14, followed at a distance by Convertible Securities CEFs (+3.07%) and Core CEFs (+1.89%). For the sixth month running domestic taxable bond CEFs posted a plus-side return on average (+0.51%), bettering their municipal bond CEF (+0.14%) and world income CEF (-2.83%) counterparts. The world income CEFs macro-group was dragged down by the performance of Emerging Markets Debt CEFs (-6.30%, July’s fixed income universe leader) and Global Income CEFs (-1.21%). In this report we highlight August 2018 CEF performance trends, premiums and discounts, and corporate actions and events.Highlights:

  • For the fifth consecutive month equity CEFs witnessed a plus-side return on average, rising 0.75% on a NAV basis for August. Meanwhile, for the fourth month running their fixed income CEF counterparts also posted a positive return, gaining 0.12% on average for the month.
  • For August only 18% of all CEFs traded at a premium to their NAV, with 25% of equity CEFs and 13% of fixed income CEFs trading in premium territory. National municipal debt CEFs witnessed the largest narrowing of discounts for the month among Lipper’s CEF macro-groups—106 basis points (bps) to 7.66%.
  • Growth CEFs (+7.46%) for the first month in 14 posted the strongest plus-side return of all the CEF classifications.
  • Emerging Markets Debt CEFs (-6.30%) posted the lowest return of all the CEF classifications.
  • For the fourth month in a row the municipal debt CEFs macro-group posted a plus-side return on average (+0.14%), with all classifications in the group witnessing gains for August.

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

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