The Month In Closed-End Funds: July 2019

by: Tom Roseen

For the second consecutive month, equity CEFs on average posted plus-side returns, gaining 0.11% on a NAV basis for July.

While for the seventh month in a row, fixed income CEFs chalked up returns in the plus column (+0.80%).

Only 21% of all CEFs traded at a premium to their NAV, with 23% of equity CEFs and 20% of fixed income CEFs trading in premium territory.

Convertible Securities CEFs (+1.63%) posted the strongest positive returns of all equity CEF classifications for the month.

The Emerging Markets Hard Currency Debt CEFs classification (+1.33%) posted the strongest plus-side returns in the fixed income universe for the month.

Photo Source: REUTERS/Brendan McDermid. Traders look on as a screen shows Federal Reserve Chairman Jerome Powell's news conference after the U.S. Federal Reserve interest rates announcement on the floor of the New York Stock Exchange on July 31, 2019.

For the month, 81% of all closed-end funds (BATS:CEFS) posted net asset value (NYSE:NAV)-based returns in the black, with 61% of equity CEFs and 97% of fixed income CEFs chalking up returns in the plus column. For the second month in three, Lipper’s mixed-asset CEFs macro-group (+1.39%) outpaced its two equity-based brethren: domestic equity CEFs (-0.02%) and world equity CEFs (-0.70%). For the first month in 11, the Convertible Securities CEFs classification (+1.63%) outperformed all other equity classifications, followed by Income & Preferred Stock CEFs (+1.30%) and Diversified Equity CEFs (+0.82%).

For the second consecutive month, world income CEFs remained at the top of the leaderboard, posting a plus-side return on average (+1.03%), followed by municipal bond CEFs (+0.96%) and domestic taxable bond CEFs (+0.62%). All of the domestic taxable fixed income CEF classifications posted plus-side returns for the month, with Loan Participation CEFs (+0.79%, June’s laggard), Corporate BBB-Rated Debt CEFs (Leveraged) (+0.67%), and General Bond CEFs (+0.61%) posting the strongest returns of the group. For the ninth consecutive month, the municipal debt CEFs macro-group posted a return in the black (+0.96%) on average, with all the classifications in the group experiencing plus-side returns for July.

For July, the median discount of all CEFs narrowed 128 basis points (bps) to 5.65%—still narrower than the 12-month moving average median discount (8.41%). In this report, we highlight July 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.