The Month In Closed-End Funds: October 2022

Nov. 08, 2022 10:15 AM ETPEO, NDP, EMO, CEM, CTR, NHS, MFV, CIF, VLT, EAD1 Comment

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Summary

For the first month in three, equity CEFs (+4.49%) on average witnessed plus-side returns, while their fixed income CEF cohorts (-0.41%) suffered a third month of declines in October.
Only 17% of all CEFs traded at a premium to their NAV at month end, with 24% of equity CEFs and 11% of fixed income CEFs trading in premium territory.
Natural Resources CEFs (+13.36%) outshined the other classifications in the equity CEF universe for October.
For the first month in 20, High Yield CEFs (Leveraged) (+1.84%) moved to the top of the leaderboard in the fixed income CEF universe for October.
For the third month in a row, the municipal debt CEFs macro-group posted a negative return (-2.28% on average), with all nine classifications experiencing negative performance for the month.

Stock Market Capital Gains Increasing From A Bull Market — Darren415/iStock via Getty Images

For the month, 59% of all closed-end funds (CEFs) posted net-asset-value (NAV)-based returns in the black, with 79% of equity CEFs and just 43% of fixed income CEFs chalking up returns in the plus column. For the first month in three, Lipper’s domestic equity CEFs (+5.36%) macro-group outpaced its two equity-based brethren: world equity CEFs (+4.10%) and mixed-assets CEFs (+2.16%). For the first month in five, the Natural Resources CEFs classification (+13.36%) moved to the top of the equity leaderboard, followed by Energy MLP CEFs (+12.77%) and Diversified Equity CEFs (+7.39%).

For the second consecutive month, the domestic taxable bond CEFs macro-group outpaced or mitigated losses better than the other macro-groups in the fixed income universe, posting a 0.63% gain on average, followed by world income CEFs (+0.52%) and municipal debt CEFs (-2.28%). Fixed income investors continued their search for yield while shunning tax-exempt issues in October. For the first month in 20, investors pushed High Yield CEFs (Leveraged) (+1.84%) to the top of the domestic taxable fixed income leaderboard (and fixed income universe), followed by High Yield CEFs (+1.65%) and Loan Participation CEFs (+0.70%).

For October, the median discount of all CEFs widened 11 basis points (bps) to 9.90%—wider than the 12-month moving average median discount (6.42%). In this report, we highlight October 2022 CEF performance trends, premiums and discounts, and corporate actions and events.

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This article was written by

Tom Roseen

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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.

The Month In Closed-End Funds: October 2022

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