October 3, 2018

The Month in Closed-End Funds: September 2018

by Tom Roseen.

For the month only 46% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with 45% of equity CEFs and 47% of fixed income CEFs chalking up returns in the plus column. Relatively stronger returns from select buy-write and covered-called funds helped the Options Arbitrage/Options Strategies CEFs classification (+0.33%) rise to the top of the equity charts, followed by Global CEFs (+0.25%) and Natural Resources CEFs (0.00%). For the seventh month running domestic taxable bond CEFs posted a plus-side return on average (+0.57%), bettering municipal bond CEFs (-0.89%) but underperforming world income CEFs (+1.52%). The world income CEFs macro-group was propped up by the performance of Emerging Markets Debt CEFs (+3.24%) and Global Income CEFs (+0.72%). In this report we highlight September 2018 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the first month in six equity CEFs on average witnessed a loss, declining 0.41% on a NAV basis for September. Meanwhile, for the first month in five their fixed income CEF counterparts also posted a negative return, losing 0.07% on average for the month.
  • For September only 17% 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 widening of discounts for the month among Lipper’s CEF macro-groups—185 basis points (bps) to 9.51%.
  • Options Arbitrage/Options Strategies CEFs (+0.33%) posted the strongest plus-side return of all the equity CEF classifications.
  • Emerging Markets Debt CEFs (+3.24%, August’s laggard) posted the strongest return of all the CEF classifications.
  • For the first month in five the municipal debt CEFs macro-group posted a negative return on average (-0.89%), with all classifications in the group witnessing declines for September.

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

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