Weekly CEF Roundup: June 1, 2018

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Includes: BLE, BST, BZM, CBA, CEN, CTR, CXH, EDF, EMO, ETO, GER, GGM, GGO, GGT, GMZ, GUT, IGI, IRR, OXLC, PCM, PSF, RCG, RCS, RVT, SPXX
by: Stanford Chemist

Summary

26 and 18 out of 31 sectors positive by price and NAV respectively.

MLP and energy/resources lead while emerging markets lag.

ClearBridge MLP funds announce merger.

The Weekly CEF Roundup will be put out at the start of each week to summarize recent price movements in closed-end fund (CEF) sectors in the last week, as well as to highlight recently concluded or upcoming corporate actions on CEFs, such as tender offers. Most of the information has been sourced from CEFInsight or the Closed-End Fund Center. I will also link to some articles from Seeking Alpha that I have found for useful reading over the past week. The searchable tag for this feature is "cildoc". Data are taken from the close of Friday, June 1, 2018.

Weekly performance roundup

This week was a strong one for CEFs. 26 out of 31 sectors were positive on price (up from 16 last week) and the average price return was +0.47% (up from -0.30%). MLPs rebounded with a +3.06% return, followed by U.S. real estate at +1.98% and energy/resources at +1.74%. The biggest loser was Latin American equity (-1.04%).

(Source: Stanford Chemist, CEFConnect)

NAV returns were not as strong relative to price returns. 18 out of 31 sectors were positive on NAV (up from 13 last week), while the average NAV return was +0.17% (up from -0.24%). The gainers and losers were similar to the price gainers and losers.

(Source: Stanford Chemist, CEFConnect)

The sector with the highest premium is multi-sector income (1.65%), while the sector with the highest discount is New Jersey munis (-12.51 %). The average sector discount is -6.34% (up from -6.61% last week).

(Source: Stanford Chemist, CEFConnect)

Latin American equity showed the largest premium/discount increase (+1.09%), while U.S. tax-advantaged equity showed the largest premium/discount decline (-0.43%). The average change in premium/discount was 0.28% (up from -0.06% last week).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest average 1-year z-score is multi-sector income (+0.79) while the sector with the lowest z-score is Pennsylvania munis (-1.47). The average z-score is -0.38 (up from -0.51 last week).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest yield is MLPs (9.89%), followed by global growth & income (9.48%), emerging market income (9.32%), global equity dividend (8.93%) and multi-sector income (8.61%). Discounts and z-scores for the sectors are included for comparison. The average sector yield is 6.82% (down from 6.85% last week).

(Source: Stanford Chemist, CEFConnect)

Individual CEFs that have undergone a significant decrease in premium/discount value over the past week, coupled optionally with an increasing NAV trend, a negative z-score, and/or are trading at a discount, are potential buy candidates.

Ticker

P/D decrease

Yield

P/D

z-score

Price change

NAV change

(IGI)

-4.53%

4.93%

2.45%

0.0

-4.48%

-0.25%

(OXLC)

-4.47%

15.38%

4.56%

0.3

-4.09%

0.00%

(GER)

-1.93%

9.67%

-2.09%

-0.4

3.79%

5.84%

(ETO)

-1.86%

8.49%

4.32%

1.1

-1.71%

0.04%

(PCM)

-1.84%

8.12%

13.77%

1.6

-1.69%

-0.10%

(GGT)

-1.83%

9.31%

6.06%

1.5

-1.47%

0.22%

(IRR)

-1.80%

10.27%

-4.14%

-1.4

0.00%

1.87%

(GMZ)

-1.49%

9.21%

-5.31%

-0.6

3.29%

4.91%

(BLE)

-1.47%

5.51%

-3.32%

-0.1

-1.16%

0.34%

(CEN)

-1.44%

13.27%

1.72%

0.0

3.28%

4.74%

(Source: Stanford Chemist, CEFConnect)

Conversely, individual CEFs that have undergone a significant increase in premium/discount value in the past week, coupled optionally with a decreasing NAV trend, a positive z-score, and/or are trading at a premium, are potential sell candidates.

Ticker

P/D increase

Yield

P/D

z-score

Price change

NAV change

(GGO)

5.47%

3.93%

3.59%

3.0

5.52%

-0.05%

(RCG)

4.88%

%

3.03%

1.3

6.92%

1.85%

(GGM)

3.82%

9.67%

6.33%

2.0

3.77%

0.05%

(EDF)

3.45%

15.31%

10.24%

0.1

0.71%

-2.44%

(RCS)

3.07%

8.93%

31.39%

1.1

2.11%

-0.27%

(SPXX)

2.67%

5.95%

12.64%

1.5

2.93%

0.49%

(BST)

2.67%

4.56%

10.48%

2.5

2.61%

0.13%

(CTR)

2.34%

10.18%

-3.37%

0.1

5.14%

2.60%

(BZM)

2.29%

4.29%

-9.33%

-1.0

2.86%

0.27%

(PSF)

2.10%

7.86%

0.84%

0.6

2.25%

0.11%

(Source: Stanford Chemist, CEFConnect)

Recent corporate actions

These are from the last month and are quoted from Closed-End Fund Center, Morningstar, or CEFInsight (email alerts); any new news in the past week has a bolded date:

May 16, 2018 | The Gabelli Utility Trust (NYSE:GUT) (the "Fund") is pleased to announce the successful completion of its transferable rights offering (the "Offering" or "Offer") in which the Fund will issue 8,831,210 common shares, totaling $48,571,655. The Offering was significantly over-subscribed, with $92 million received. Approximately 62% of the primary shares were subscribed for in the primary subscription, and the remaining shares were subscribed for pursuant to the over-subscription privilege. The over-subscription requests exceeded the over-subscription shares available. As a result, the available over-subscription shares will be allocated pro rata among those fully exercising record date shareholders who over-subscribed based on the number of rights originally issued to them by the Fund. The Fund will return to those investors that submitted over-subscription requests the full amount of their excess payments. All of the common shares subscribed for will be issued on or about May 21, 2018. Any new common shares issued as a result of the Offer will not be record date shares for the Fund's monthly distribution to be paid on May 23, 2018 and will not be entitled to receive such distribution.

May 4, 2018 | MFS Investment Grade Municipal Trust (the "fund") (CXH) announced today that, in accordance with its tender offer for up to 7.5 percent of the fund's outstanding common shares (the "shares"), which expired at 5:00 P.M., Eastern Time, on May 2, 2018, the fund has accepted 738,668 shares, representing 7.5 percent of shares, for payment on or about May 7, 2018. A total of 3,253,218.909609 shares were properly tendered and not withdrawn by May 2, 2018, the final date for withdrawals. Therefore, on a pro-rated basis, approximately 22.70783 percent of the shares so tendered by each shareholder have been accepted for payment. The purchase price of properly tendered shares is 98 percent of the fund's net asset value (NAV) per share calculated as of the close of regular trading on the New York Stock Exchange on May 2, 2018, which is equal to $10.084 per share.

Upcoming corporate actions

These are from the last month and are quoted from Closed-End Fund Center, Morningstar, or CEFInsight (email alerts); any new news in the past week has a bolded date:

May 29, 2018 | ClearBridge American Energy MLP Fund Inc. (CBA) and ClearBridge Energy MLP Opportunity Fund Inc. (EMO) today announced approval by each Fund's Board of Directors of a proposal to merge CBA with and into EMO, subject to approval by the stockholders of each Fund. If the proposed merger is approved by the stockholders of each Fund, (i) common stockholders of CBA would receive common stock of EMO, based on each Fund's respective net asset value per share and (ii) holders of CBA's mandatory redeemable preferred stock (the "CBA MRPS") would receive shares of mandatory redeemable preferred stock of EMO in the same number and with terms identical to their CBA MRPS. In lieu of issuing fractional shares of common stock, EMO will pay cash to each former common stockholder of CBA in an amount equal to the value of the fractional shares of CBA common stock that the investor would otherwise have received in the merger. If approved by stockholders, the merger is anticipated to occur during the fourth quarter of 2018.

Management and each Fund's Board of Directors believe it is in the best interests of stockholders to merge CBA with and into EMO in part because the combined Fund may benefit from economies of scale, as one set of fixed expenses would be spread over a larger asset base, as well as from the possibility of enhanced market liquidity and improved market price trading relative to NAV. The Merger will also result in a more streamlined product offering, allowing for more focused marketing and stockholder servicing efforts. Management and the Fund's investment adviser do not anticipate any material portfolio turnover as a result of the proposed merger. The merger is expected to qualify as a tax-free reorganization for federal income tax purposes.

EMO Name and Policy Change: EMO also today announced approval by its Board of Directors of a change to its name from "ClearBridge Energy MLP Opportunity Fund Inc." to "ClearBridge Energy Midstream Opportunity Fund Inc." and, relatedly, an amendment of EMO's 80% policy from investing at least 80% of its managed assets in master limited partnerships ("MLPs") in the energy sector to investing at least 80% of its managed assets in energy midstream entities including entities structured as both partnerships and corporations. The name and investment policy change should allow additional investment flexibility by including midstream C corporations in EMO's current 80% policy. Management does not anticipate any material change in the portfolio construction in the near term because of this policy change. EMO will implement the name and investment policy changes concurrently with the merger, although such changes are not required to be approved by stockholders and will be implemented whether or not the merger is approved.

May 11, 2018 | Managed Duration Investment Grade Municipal Fund ("MZF" or the "Fund") announced today that the Board of Trustees of the Fund (the "Board") has determined to submit a proposal to liquidate the Fund to a vote of all shareholders at a Special Meeting of Shareholders, which is scheduled to be held on July 12, 2018. In addition, the Board of Trustees has postponed the Fund's 2018 Annual Meeting of Shareholders previously scheduled for the same date. In determining to recommend liquidation of the Fund to shareholders, the Fund's investment adviser, Cutwater Investor Services Corp. (doing business as Insight Investment), and the Board considered a variety of factors and determined that a liquidation would be in the best interests of the Fund and its shareholders. In addition, the Fund's investment adviser entered into a standstill agreement with Karpus Investment Management, Inc. ("Karpus"), a large Fund shareholder, in connection with the proposed liquidation of the Fund. Under the terms of the agreement, Karpus has agreed, among other things, to withdraw its shareholder proposals and director nomination for the Fund's 2018 Annual Meeting of Shareholders. The Fund has been advised that Karpus will file a copy of the agreement with the Securities and Exchange Commission as an exhibit to its Schedule 13D.

May 11, 2018 | Aberdeen Emerging Markets Equity Income Fund, Inc. (the "Fund") (NYSE American: AEF) announced today that the Board of Directors of the Fund approved a tender offer by the Fund to acquire, in exchange for cash, up to 32% of the Fund's issued and outstanding shares at a price per share equal to 99% of the Fund's net asset value per share as determined by the Fund on the next business day following the expiration date of the tender offer (the "Tender Offer"). The Tender Offer will commence on or about May 22, 2018 and will expire at 11:59 p.m. New York City time on June 19, 2018, unless otherwise extended. The Tender Offer follows the consolidation of Aberdeen Emerging Markets Smaller Company Opportunities Fund, Inc. ("ABE"), Aberdeen Israel Fund, Inc. ("ISL"), Aberdeen Indonesia Fund, Inc. ("IF"), Aberdeen Latin America Equity Fund, Inc. ("LAQ"), Aberdeen Singapore Fund, Inc. ("SGF"), Aberdeen Greater China Fund, Inc. ("GCH") and The Asia Tigers Fund, Inc. ("GRR") into the Fund, which closed on April 27, 2018. As previously announced, the Fund also anticipates making a special distribution, comprised of net realized capital gains. The capital gain distribution is currently estimated to represent approximately 9% of the Fund's net assets which, in combination with the tender offer, will represent an aggregate distribution of approximately 41% of the consolidated Fund assets as of the reorganization closing date of April 27, 2018. It is anticipated that the exact final amount of the capital gains distribution will be formally declared on June 4, 2018 and will be paid on June 28, 2018 to shareholders of record on June 15, 2018, so that tendering shareholders who hold shares on the record date will be entitled to receive the distribution.

Recent activist or other CEF news

These are from the last month and are quoted from Closed-End Fund Center, Morningstar, or CEFInsight (email alerts); any new news in the past week has a bolded date:

May 24, 2018 | THL Credit Senior Loan Fund (the "Fund") (NYSE: TSLF) today announced several actions relating to the management and oversight of the Fund. The Fund's Board of Trustees (the "Board") has approved THL Credit Advisors LLC ("THL Credit"), the Fund's current subadviser, to serve as the sole investment adviser to the Fund. The Fund's current advisory agreement with Four Wood Capital Advisors LLC ("FWCA") will terminate on June 21, 2018, along with the Fund's investor support services agreement with FWCA's affiliate, Four Wood Capital Partners LLC ("FWCP"). On June 22, 2018, THL Credit will commence serving as the sole investment adviser to the Fund pursuant to an interim advisory agreement that was approved by the Fund's Board (the "Interim THL Agreement"). The Fund's Board also approved a new, non-interim, advisory agreement between the Fund and THL Credit (the "New THL Agreement"), which will be subject to approval by the Fund's shareholders. Under both the Interim THL Agreement and proposed New THL Agreement, the annual fee rate payable by the Fund has been reduced from 1.05% to 0.80% of the value of the Fund's average daily Managed Assets. THL Credit will provide investor support as part of its advisory relationship and the Fund will no longer bear the annual fee of 0.05% of the average daily Managed Assets of the Fund paid to FWCP for those services. In addition, THL Credit has agreed to limit, indefinitely, certain non-management expenses borne by the Fund to an amount not to exceed 0.25% per year of the Fund's Managed Assets (pro-rated for the period in 2018 during which THL Credit serves as the Fund's sole investment adviser). THL Credit also has agreed to bear up to $500,000 of certain expenses in connection with the transfer of the advisory relationship from FWCA to THL Credit.

May 24, 2018 | Eagle Growth and Income Opportunities Fund (the "Fund") (NYSE: EGIF) today announced that the Fund's Board of Trustees approved a proposal to reduce the Fund's annual advisory fee rate, effective May 24, 2018, to 0.85% of the average daily value of the Fund's Managed Assets,1 a decrease of 0.20% from the prior advisory fee rate of 1.05%. In addition, Fund's Board of Trustees approved an amended Investor Support Services Agreement which makes permanent a waiver which reduced the fees payable under that agreement, effective May 24, 2018, to 0.05% of the average daily value of the Fund's Managed Assets, a decrease of 0.05% from the prior fee rate of .10%.

Distribution changes announced this month

These are sorted in ascending order of distribution change percentage. Funds with distribution changes announced this month are included. Any distribution declarations made this week are in bold. I've also added monthly/quarterly information as well as yield, coverage (after the boost/cut), discount and 1-year z-score information. I've separated the funds into two sub-categories, cutters and boosters.

Cutters

Name Ticker Change Previous Current Yield Discount z-score Coverage Announced Ex-date
Royce Value Trust (RVT) -7.3% 0.32349 0.3 7.37% -8.74% 0.3 5% 6/1/2018 6/8/2018

Boosters

None

Note: Nuveen cuts not yet uploaded to CEFConnect so are not presented in this week's report.

CEF analysis from around Seeking Alpha...

Arbitrage Trader presents Weekly Review: High-Yield CEFs (May 30), Weekly Review: Municipal Bond CEFs (May 30), Weekly Municipal Bond CEF Trades (May 30) and Weekly Review: Master Limited Partnership CEFs (May 30)

Douglas Albo presents Equity CEFs: Sell This, Buy That From This Fund Family (May 29)

Left Banker presents Which Of PIMCO's 3 California Muni Bond CEFs Is A Buy? (May 29) and NHF Rights Offering Expires At A -15.8% Discount (May 30)

Nick Ackerman presents CEFs PDI Or PCI: Which Fund Is More Attractive? (May 27), CEFs: Utilities For The Wild Days (May 30) and CEF RNP: Looking Attractive (Jun 1)

*Stanford Chemist presents: NHF's Rights Offering Analysis (May 29), Weekly CEF Roundup: May 18, 2018 (June 2) and Gabelli Utility Trust's Rights Offering Oversubscribed (June 3)

*To subscribers: these link to the public version of the article, which you will already have seen in the members section.

Macro/market section

Fear & Greed Trader S&P 500 Weekly Update: Headlines Rule The Market, Don't Panic Over The 'Crisis' Of The Day (June 1)

Jeff Miller presents Weighing The Week Ahead: Is It Time To Worry About A Trade War? (June 3)

Lance Roberts presents Treading Water (June 3)

Disclosure: I am/we are long THE PORTFOLIO SECURITIES.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.