KF - The Month In Closed-End Funds: November 2023

2023-12-06 18:31:16 ET

Summary

• For the first month in four, both equity (+6.05% on a NAV basis) and fixed income (+5.81%) CEFs on average posted handsome plus-side returns.
• At month end, 9% of all CEFs traded at a premium to their NAV, with 10% of equity CEFs and 8% of fixed income CEFs trading in premium territory.
• Developed Markets CEFs (+8.93%), for the first month in eight, outpaced the other classifications in the equity CEF universe for November.
• Corporate Debt BBB-Rated CEFs (+5.27%), also for the first month in eight, outperformed the other classifications in the domestic taxable fixed income CEF universe.
• The municipal debt CEFs macro-group (+11.04%) trounced its world income (+3.61%) and domestic taxable bond (+3.02%) CEF counterparts for the first month in eight.

For the month, 96% of all closed-end funds (CEFs) posted net asset value ((NAV))-based returns in the black, with 92% of equity CEFs and 98% of fixed income CEFs chalking up returns in the plus column. The average equity and fixed income CEF posted NAV-based gains of 6.05% and 5.81%, respectively, for November.

Lipper’s world equity CEFs (+7.82%) macro-group, for the first month in four, outpaced its two equity-based brethren: mixed-assets CEFs (+6.21%) and domestic equity CEFs (+5.41%). The Developed Markets CEFs classification (+8.93%, October’s laggard) moved to the top of the equity leaderboard for the first month in eight, followed by Emerging Markets CEFs (+8.28%) and Utility CEFs (+8.16%).

Year to date, equity and fixed income CEFs jumped into the black on a NAV basis, rising 5.81% and 7.33%, respectively.

The municipal debt CEFs macro-group—for the first month in eight—outpaced the other two macro-groups in the fixed income universe, posting an eye-popping 11.04% gain on average, followed by world income CEFs (+3.61%) and domestic taxable bond CEFs (+3.02%). Also, for the first month in eight, investors pushed Corporate Debt BBB-Rated CEFs (+5.27%) to the top of the domestic taxable fixed income leaderboard, followed by Corporate Debt BBB-Rated CEFs (Leveraged) (+5.02%) and High Yield CEFs (Leveraged) (+5.01%).

The median discount of all CEFs narrowed 134 bps to 11.70% for November—wider than the 12-month moving average median discount (10.64%). Equity CEFs’ median discount narrowed by 183 bps to 12.03%, while fixed income CEFs’ median discount narrowed by 90 bps to 11.37%.

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

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