NRGX - The Month In Closed-End Funds: August 2022

Summary

• For the second month in three, CEFs on average witnessed downside returns, declining 2.23% on a NAV basis for August.
• While for the seventh month in eight, fixed income CEFs posted returns in the red (-1.29%).
• Twenty-five percent of all CEFs traded at a premium to their NAV at month-end, with 28% of equity CEFs and 22% of fixed income CEFs trading in premium territory.
• Energy MLP CEFs (+1.89%) outshined the other classifications in the equity CEF universe for August.
• For the first month in four, the Loan Participation CEFs (+1.35%) classification rose to the top of the leader board in the fixed income CEF universe for August.

For the month, 29% of all closed-end funds (CEFs) posted net-asset-value ((NAV)) based returns in the black, with 21% of equity CEFs and 36% of fixed income CEFs chalking up returns in the plus column. For the second month in three, Lipper’s mixed-assets CEFs (-1.49%) macro-group outpaced or mitigated losses better than its two equity-based brethren: domestic equity CEFs (-1.97%) and world equity CEFs (-3.69%). Despite a decline in oil prices and concerns of a global recession, for the second month in a row, the Energy MLP CEFs classification (+1.89%) remained at the top of the equity leaderboard, followed by Natural Resources CEFs (+1.24%) and Convertible Securities CEFs (-1.03%).

For the first month in five, the world income CEFs macro-group outpaced or mitigated losses better than the other macro-groups in the fixed income universe, posting a 0.33% gain on average, followed by domestic taxable bond CEFs (-0.03%) and municipal debt CEFs (-3.71%). Fixed income investors appeared to be more internationally risk seeking during the month, shunning higher quality domestic and tax-exempt issues. For the first month in four, investors pushed Loan Participation CEFs (+1.35%) to the top of the domestic taxable fixed income leaderboard, followed by General Bond CEFs (+0.62%) and U.S. Mortgage CEFs (-0.23%).

For August, the median discount of all CEFs widened 40 basis points (bps) to 6.72%—wider than the 12-month moving average median discount (5.17%). In this report, we highlight August 2022 CEF performance trends, premiums and discounts, and corporate actions and events.

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