For the second consecutive month, equity CEFs on average posted negative returns, declining 0.41% on a NAV basis for October.
While for the seventh month in a row, fixed income CEFs witnessed returns in the black (+0.03%).
Only 11% of all CEFs traded at a premium to their NAV, with 10% of equity CEFs and 11% of fixed income CEFs trading in premium territory.
Energy MLP Funds (+3.11%) posted the strongest one-month returns of the equity classifications in the CEF universe for October.
For the second straight month, the domestic taxable bond CEFs (+0.32%) macro-group posted the strongest plus-side returns in the CEF universe for October.
Photo Source: REUTERS/Mike Segar. The facade of the New York Stock Exchange is pictured in Manhattan in New York City, New York, U.S., October 26, 2020.
For the month, only 43% of all closed-end funds (BATS:CEFS) posted net asset value (NAV)-based returns in the black, with 45% of equity CEFs and 42% of fixed income CEFs chalking up returns in the plus column. For the second consecutive month, Lipper’s mixed-assets CEFs macro-group (-0.08%) mitigated losses better than its two equity-based brethren: domestic equity CEFs (-0.35%) and world equity CEFs (-0.88%). The Energy MLP CEFs classification (+3.11%, September’s laggard) for the first month in five outperformed all other equity classifications, followed by Emerging Markets CEFs (+1.58%) and Utility CEFs (+0.83%). Developed Markets CEFs (-3.61%) posted the worst returns in the equity universe.
For the third month in a row, domestic taxable fixed income CEFs remained at the top of the charts, posting a 0.32% return on average, followed by world income CEFs (+0.04%) and municipal bond CEFs (-0.34%). While fixed income investors were generally more risk averse toward the end of the month, they still pushed General Bond CEFs (+0.45%) to the top of the domestic taxable fixed income leaderboard for the first month since December 31, 2017.
For October, the median discount of all CEFs widened 65 bps to 10.01%—wider than the 12-month moving average median discount (8.27%). In this report, we highlight October 2020 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.
