The Month In Closed-End Funds: April 2019

by: Tom Roseen

For the fourth month in a row, equity closed-end funds (CEFs) and fixed income CEFs on average witnessed plus-side returns, rising 1.40% and 1.01%, respectively, on a net-asset-value (NAV) basis.

Only 17% of all CEFs traded at a premium to their NAV, with 21% of equity CEFs and 14% of fixed income CEFs trading in premium territory.

Core CEFs (+3.74%) posted the strongest returns of all equity CEF classifications for the month.

The Loan Participation CEFs classification (+1.72%) posted the strongest plus-side returns in the fixed income universe for the month.

For the sixth month in a row, the municipal debt CEFs macro-group posted a plus-side return on average (+0.60%), with all classifications in the group witnessing positive returns for April.

Photo Source: REUTERS/Staff. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, April 24, 2019.

For the month, 89% of all CEFs posted NAV-based returns in the black, with 79% of equity CEFs and 95% of fixed income CEFs chalking up returns in the plus column. For the first month in five, Lipper’s world equity CEFs macro-group (+2.26%) outpaced its two equity-based brethren: mixed-asset CEFs (+2.08%) and domestic equity CEFs (+0.91%). For the first month in 17, the Core CEFs classification (+3.74%) outperformed all other equity classifications, followed by Growth CEFs (+3.23%) and Value CEFs (+3.18%).

All of the domestic taxable fixed income CEF classifications posted plus-side returns for the month, with Loan Participation CEFs (+1.72%, March’s laggard), High Yield CEFs (Leveraged) (+1.56%), and High Yield CEFs (+1.45%) posting the strongest returns of the group. And for the sixth consecutive month, the municipal debt CEFs macro-group posted a return in the black (+0.60%) on average, with all the classifications in the group experiencing plus-side returns for April. The median discount of all CEFs for the month narrowed 28 bps to 7.58%—still narrower than the 12-month moving average median discount (8.57%). In this report, we highlight April 2019 CEF performance trends, premiums and discounts, and corporate actions and events.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.