The Month In Closed-End Funds: June 2019

by: Tom Roseen

For the fifth month in six, equity CEFs on average posted plus-side returns, gaining 4.16% on a NAV basis for June.

And for the sixth month in a row, fixed income CEFs chalked up returns in the plus column (+1.02%).

Only 18% of all CEFs traded at a premium to their NAV, with 20% of equity CEFs and 16% of fixed income CEFs trading in premium territory.

Diversified Equity CEFs (+6.12%) posted the strongest positive returns of all equity CEF classifications for the month.

The Emerging Markets Hard Currency Debt CEFs classification (+3.99%) posted the strongest plus-side returns in the fixed income universe for the month.

Photo Source: REUTERS/Kim Kyung-Hoon/Pool. Federal Reserve Chairman Jerome Powell talks with U.S. Treasury Secretary Steven Mnuchin during the G20 finance ministers and central bank governors meeting in Fukuoka, Japan June 8, 2019.

For the month, 95% of all closed-end funds posted NAV-based returns in the black, with 97% of equity CEFs and 94% of fixed income CEFs chalking up returns in the plus column. For the second month in three, Lipper’s world equity CEFs macro-group (+4.97%) outpaced its two equity-based brethren: domestic equity CEFs (+3.93%) and mixed-assets CEFs (+3.74%). For the second month in three, the Diversified Equity CEFs classification (+6.12%) outperformed all other equity classifications, followed by Sector Equity CEFs (+5.55%) and Global CEFs (5.39%).

For the first month in five, world income CEFs jumped to the top of the leaderboard, posting a plus-side return on average (+3.21%), followed by domestic taxable bond CEFs (+1.18%) and municipal bond CEFs (+0.48%). All of the domestic taxable fixed income CEF classifications posted plus-side returns for the month, with Corporate Debt BBB-Rated CEFs (Leveraged) (+2.55%), Corporate Debt BBB-Rated CEFs (+2.17%), and High Yield CEFs (Leveraged) (+2.04%) posting the strongest returns of the group. For the eighth consecutive month, the municipal debt CEFs macro-group posted a return in the black (+0.48%) on average, with all the classifications in the group experiencing plus-side returns for June.

For June, the median discount of all CEFs narrowed 119 bps to 6.93%—still narrower than the 12-month moving average median discount (8.58%). In this report, we highlight June 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.