The Month In Closed-End Funds: June 2020



Photo Source: Tasos Katopodis/Pool via REUTERS. Federal Reserve Chairman Jerome Powell, wearing a face mask, testifies before the House of Representatives Financial Services Committee during a hearing on oversight of the Treasury Department and Federal Reserve response to the outbreak of the coronavirus disease (COVID-19), on Capitol Hill in Washington, U.S., June 30, 2020.

For the month, 85% of all closed-end funds (CEFs) posted net asset value (“NAV”)-based returns in the black, with 69% of equity CEFs and 97% of fixed income CEFs chalking up returns in the plus column. For the second month in a row, Lipper’s world equity CEFs macro-group (+4.00%) outpaced its two equity-based brethren: mixed-assets CEFs (+1.71%) and domestic equity CEFs (+0.20%). For the first month in eight, the Emerging Markets CEFs classification (+5.64%) outperformed all other equity classifications, followed by Convertible Securities CEFs (+4.11%) and Developed Markets CEFs (+3.81%). Energy MLP CEFs (-5.87%, May’s leader) posted the worst returns of the equity universe.

For the second month in a row, world income CEFs remained at the top of the charts, posting a 3.63% return on average, followed by domestic taxable fixed income CEFs (+2.63%) and municipal bond CEFs (+2.40%). Investors continued their search for yield during the month, pushing U.S. Mortgage CEFs (+4.29%) to the top of the domestic taxable fixed income leaderboard for the month, followed by General Bond CEFs (+3.00%) and Loan Participation CEFs (+2.50%).

For June, the median discount of all CEFs widened 31 bps to 9.41%-wider than the 12-month moving average median discount (7.33%). In this report, we highlight June 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. 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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