The Month In Closed-End Funds: January 2022

Feb. 07, 2022 7:50 PM ETNDP, CEM, EMO, CTR, BGR, TSIFX, HFRO, CEDIX, CEDTX, CEDLX3 Comments
Tom Roseen profile picture
Tom Roseen
1.52K Followers

Summary

  • For the second month in three, equity CEFs on average witnessed negative returns, declining 2.40% on a NAV basis for January.
  • While for the first month three, fixed income CEFs posted returns in the red (-2.04%).
  • The national municipal debt CEFs macro-classification witnessed the largest widening of discounts for the month among Lipper’s CEF macro-groups—a whopping 419 basis points (bps) to a 5.48% median discount.
  • Energy MLP CEFs (+7.63%) for the first month in three posted the strongest one-month returns of the equity classifications in the CEF universe for January.
  • For the first month in four, the Loan Participation CEFs (+0.38%) classification posted the only plus-side returns in the fixed income CEF universe for January.
Wall street sign in New York with New York Stock Exchange background

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For the month, only 27% of all closed-end funds (CEFs) posted net-asset-value (NAV)-based returns in the black, with 30% of equity CEFs and 25% of fixed income CEFs chalking up returns in the plus column. For the second month in a row, Lipper’s domestic equity CEFs (-1.29%) macro-group mitigated losses better than or outpaced its two equity-based brethren: mixed-assets CEFs (-3.48%) and world equity CEFs (-4.76%). Given the rapid rise in crude oil prices, it wasn’t surprising to see the Energy MLP CEFs classification (+7.63%) for the first month in three outperform all other equity classifications, followed by Natural Resources CEFs (+6.92%) and Real Estate CEFs (-0.35%).

For the first month in three, the domestic CEFs macro-group chalked up the strongest relative returns in the fixed income universe, posting a 0.91% decline on average, followed by world income CEFs (-0.95%) and municipal bond CEFs (-3.79%) - their worst monthly returns since March 2020. Fixed income investors focused their attention on imminent interest rate hikes and inflation during the month. They pushed Loan Participation CEFs (+0.38%) to the top of the domestic taxable fixed income leaderboard for the first month in four, followed by U.S. Mortgage CEFs (-0.65%) and General Bond CEFs (-0.86%).

For January, the median discount of all CEFs widened a whopping 256 bps to 4.59% - wider than the 12-month moving average median discount (3.06%) and its widest month-end discount since March 31, 2021. In this report, we highlight January 2022 CEF performance trends, premiums and discounts, and corporate actions and events.

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This article was written by

Tom Roseen profile picture
1.52K Followers
Tom Roseen is the Head of Research Services, joining from Janus in 1996. He is the editor and an author of Lipper's U.S. Research Studies, FundFlows Insight Reports and FundIndustry Insight Reports. He is involved in fund analysis and research, and contributes to the monthly and quarterly equity and fixed income FundMarket Insight reports, webcasts and podcasts, where he focuses on domestic and world fund performance and attribution. His areas of expertise include closed-end fund analysis, portfolio evaluation, equity and fixed income fund research, fund flows analysis, after-tax performance and Lipper Leaders. Tom has a BS in finance from Metropolitan State College of Denver and a Master's in International Management from the University of Denver.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such 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.

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