VLT - The Month In Closed-End Funds: July 2022

• Fixed income and equity CEFs posted their best monthly NAV-based returns since November 2020.
• For the second month in three, equity CEFs on average witnessed plus-side returns, climbing 5.75% on a NAV basis for July.
• While for the first month in seven, fixed income CEFs posted returns in the black (+3.51%).
• Only 23% of all CEFs traded at a premium to their NAV at month end, with 28% of equity CEFs and 18% of fixed income CEFs trading in premium territory.
• Energy MLP CEFs (+12.58%) outshone the other classifications in the equity CEF universe for July.

For the month, 96% of all closed-end funds (CEFs) posted net-asset-value (NAV)-based returns in the black, with 97% of equity CEFs and 95% of fixed income CEFs chalking up returns in the plus column. For the eighth month in nine, Lipper’s domestic equity CEFs (+6.22%) macro-group outpaced or mitigated losses better than its two equity-based brethren: mixed-assets CEFs (+5.84%) and world equity CEFs (+4.32%). Despite a decline in oil prices and concerns of a global recession, for the first month in five, the Energy MLP CEFs classification (+12.58%, June’s laggard) moved to the top of the equity leaderboard, followed by Natural Resources CEFs (+9.61%) and Diversified Equity CEFs (+8.19%).

For the third month in a row, the municipal debt CEFs macro-group outpaced or mitigated losses better than the other macro-groups in the fixed income universe, posting a 4.60% gain on average, followed by domestic taxable bond CEFs (+3.05%) and world income CEFs (+1.81%). Fixed income investors appeared to be more domestically risk seeking during the month, shunning higher quality and foreign issues. For the first month in seven, investors pushed High Yield CEFs (Leveraged) (+5.41%, June’s laggard) to the top of the domestic taxable fixed income leaderboard, followed by Corporate Debt BBB-Rated CEFs (Leveraged) (+4.72%) and High Yield CEFs (+4.69%).

For July, the median discount of all CEFs narrowed 85 basis points (bps) to 6.31%—wider than the 12-month moving average median discount (4.75%). In this report, we highlight July 2022 CEF performance trends, premiums and discounts, and corporate actions and events.

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