NRGX - The Month In Closed-End Funds: September 2023

2023-10-08 05:37:39 ET

Summary

• For the second straight month, both equity (-3.12% on a NAV basis) and fixed income (-1.94%) CEFs on average suffered downside performance.
• At month end, 9% of all CEFs traded at a premium to their NAV, with 11% of equity CEFs and 8% of fixed income CEFs trading in premium territory.
• Energy MLP CEFs (-0.72%), for the second month in a row, mitigated losses better than the other classifications in the equity CEF universe for September.
• Loan Participation CEFs (+0.83%), for the second straight month, outperformed the other classifications in the domestic taxable fixed income CEF universe.

For the month, 23% of all closed-end funds (CEFs) posted net asset value ((NAV))-based returns in the black, with just 10% of equity CEFs and 33% of fixed income CEFs chalking up returns in the plus column. The average equity and fixed income CEF posted NAV-based losses of 3.12% and 1.94%, respectively, for September.

Lipper’s mixed-assets CEFs (-1.93%) macro-group, for the second straight month, mitigated losses better than its two equity-based brethren: domestic equity CEFs (-3.11%) and world equity CEFs (-4.22%). The Energy MLP CEFs classification (-0.72%), also for the second month in a row, remained at the top of the equity leaderboard, followed by Income & Preferred Stock CEFs (-1.29%) and Natural Resources CEFs (-1.52%).

Year to date, both equity and fixed income CEFs still managed to post plus-side returns on a NAV basis, rising 2.37% and 3.04%, respectively.

The domestic taxable bond 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 0.24% loss on average, followed by world income CEFs (-0.75%) and municipal debt CEFs (-4.99%). Also, for the second straight month, investors kept Loan Participation CEFs (+0.83%) at the top of the domestic taxable fixed income leaderboard, followed by High Yield CEFs (-0.03%) and General Bond CEFs (-0.09%).

The median discount of all CEFs widened 165 bps to 12.29% for September—wider than the 12-month moving average median discount (10.02%). Equity CEFs’ median discount widened by 123 bps to 13.11%, while fixed income CEFs’ median discount widened by 124 bps to 11.09%.

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

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