XFLT - The Month In Closed-End Funds: June 2023

2023-07-08 03:36:51 ET

Summary

• In June, 92% of all closed-end funds (CEFs) posted net asset value (NAV)-based returns in the black, with average returns of 3.57% for equity CEFs and 1.63% for fixed income CEFs.
• The Natural Resources CEFs classification topped the equity leaderboard with a 6.29% return, while High Yield CEFs led the domestic taxable fixed income leaderboard with a 2.63% return.
• The median discount of all CEFs narrowed to 10.79% in June, with equity.

For the month, 92% of all closed-end funds (CEFs) posted net asset value ((NAV))-based returns in the black, with 88% of equity CEFs and 94% of fixed income CEFs chalking up returns in the plus column. The average equity and fixed income CEF posted NAV-based returns of 3.57% and 1.63%, respectively, for June.

Lipper’s world equity CEFs macro-group (+4.44%) for the third month in four outpaced or mitigated losses better than its two equity-based brethren: domestic equity CEFs (+3.43%) and mixed-assets CEFs (+3.11%). For the first month in eight, the Natural Resources CEFs classification (+6.29%) moved to the top of the equity leaderboard, followed by Energy MLP CEFs (+6.15%) and Diversified Equity CEFs (+5.10%).

The world income CEFs macro-group—for the second month in a row—outpaced or mitigated losses better than the other two macro-groups in the fixed income universe, posting a 2.17% gain on average, followed by municipal debt CEFs (+1.65%) and domestic taxable bond CEFs (+1.50%). Investors pushed High Yield CEFs (+2.63%) to the top of the domestic taxable fixed income leaderboard for the first month in six, followed by Loan Participation CEFs (+1.78%) and High Yield (Leveraged) CEFs (+1.72%).

For Q2, both equity and fixed income CEFs posted plus-side returns on a NAV basis, rising 2.22% and 1.51%, respectively.

The median discount of all CEFs narrowed 76 bps to 10.79% for June—wider than the 12-month moving average median discount (9.16%). Equity CEFs’ median discount narrowed by 64 basis points (bps) to 11.92%, while fixed income CEFs’ median discount narrowed by 91 bps to 10.10%.

In this report, we highlight June 2023 CEF performance trends, premiums and discounts, and corporate actions and events.

For further details see: