November 5, 2018

The Month in Closed-End Funds: October 2018

by Tom Roseen.

For the month only 6% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with 5% of equity CEFs and 7% of fixed income CEFs chalking up returns in the plus column. The Real Estate CEFs classification (-1.56%) mitigated losses better than all the other equity classifications, followed by Utility CEFs (-3.05%) and Income & Preferred Stock CEFs (-3.21%). For the first month in eight domestic taxable bond CEFs posted a loss on average (-0.94%), bettering municipal bond CEFs (-1.26%) and world income CEFs (-1.45%). The world income CEFs macro-group was dragged down by the performance of Emerging Markets Debt CEFs (-1.95%) and Global Income CEFs (-1.22%). In this report we highlight October 2018 CEF performance trends, premiums and discounts, and corporate actions and events.

Highlights:

  • For the second month in a row equity CEFs and fixed income CEFs on average witnessed a loss, declining 5.84% (equity CEFs’ largest one-month loss since January 2016) and 1.13%, respectively, on a NAV basis for October.
  • Only 11% of all CEFs traded at a premium to their NAV, with 14% of equity CEFs and 8% of fixed income CEFs trading in premium territory. World income CEFs witnessed the largest widening of discounts for the month among Lipper’s CEF macro-groups—397 basis points to 12.40%.
  • Real Estate CEFs (-1.56%) mitigated losses better for the month than the other equity CEF classifications.
  • U.S. Mortgage CEFs (-0.29%) limited losses better than all the other CEF classifications.
  • For the second month in a row the municipal debt CEFs macro-group posted a negative return on average (-1.26%), with all classifications in the group witnessing declines for October.

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

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