BIGZ - Weekly Closed-End Fund Roundup: BlackRock Repurchases (April 30 2023)
2023-05-10 10:51:57 ET
Summary
- 16 out of 22 CEF sectors positive on price and 14 out of 22 sectors positive on NAV last week.
- BlackRock Inc. share repurchase update.
- Voluntary share repurchases show alignment between managers and shareholders.
Author's note: This article was released to CEF/ETF Income Laboratory members on May 3rd, 2023. Please check latest data before investing.
The Weekly Closed-End Fund Roundup will be put out at the start of each week to summarize recent price movements in closed-end fund [CEF] sectors in the last week, as well as to highlight recently concluded or upcoming corporate actions on CEFs, such as tender offers. Data is taken from the close of Friday, April 28th, 2023 .
JPMorgan Chase & Co. (JPM) releases a nice Weekly Market Recap every week. The chart of the week of the FOMC dot plot shows that rates are expected to top in 2023, before moving lower in subsequent years. Although please do remember before making wholesale portfolio changes based on this expected trend, predictions about rates are hard - especially about the future!
Income Lab
This is a table of key index returns this week:
Income Lab
Weekly performance roundup
For closed-end funds, or CEFs, 16 out of 22 sectors were positive on price (up from 1 last week) and the average price return was +0.40% (up from -1.00% last week). The lead gainer was Taxable Munis (+2.53%) while Emerging Market Income lagged (-1.29%).
14 out of 22 sectors were positive on NAV (up from 3 last week), while the average NAV return was +0.03% (up from -0.72% last week). The top sector by NAV was Taxable Munis (+1.27%) while the weakest sector by NAV was Commodities (-1.75%).
The sector with the highest premium was Limited Duration (-0.51%), while the sector with the widest discount is Asia Equity (-17.30%). The average sector discount is -8.03% (up from -8.10% last week).
The sector with the highest premium/discount increase was Preferreds (+0.89%), while Emerging Market Income (-2.15%) showed the lowest premium/discount decline. The average change in premium/discount was +0.08% (down from -0.30% last week).
The sector with the highest average 1-year z-score is Commodities (+0.47), while the sector with the lowest average 1-year z-score is Asia Equity (-1.52). The average z-score is -0.61 (up from -0.66 last week).
The sectors with the highest yields are Senior Loans (+12.43%), Emerging Market Income (+11.78%), and Multisector Income (+10.91%). Discounts are included for comparison. The average sector yield is +8.20% (down from +8.22% last week).
Individual CEFs that have undergone a significant decrease in premium/discount value over the past week, coupled optionally with an increasing NAV trend, a negative z-score, and/or are trading at a discount, are potential buy candidates.
| Fund |
| Ticker |
| P/D decrease |
| Yield |
| P/D |
| z-score |
| Price change |
| NAV change |
| ArrowMark Financial Corp |
| ( BANX ) |
| -6.04% |
| 9.02% |
| -16.34% |
| -0.8 |
| -5.31% |
| -2.46% |
| Virtus Stone Harbor Emg Mkts Total Inc |
| ( EDI ) |
| -5.59% |
| 16.44% |
| 7.13% |
| 0.6 |
| -2.67% |
| 2.44% |
| The Central and Eastern Europe Fund |
| ( CEE ) |
| -4.01% |
| 2.94% |
| 1.75% |
| -1.8 |
| -1.58% |
| 0.87% |
| JHancock Financial Opportunities |
| ( BTO ) |
| -4.00% |
| 9.43% |
| 9.40% |
| 0.7 |
| -5.09% |
| -0.45% |
| Nuveen Municipal Income |
| ( NMI ) |
| -3.34% |
| 3.83% |
| -4.37% |
| 0.4 |
| -2.99% |
| -0.94% |
| PIMCO Municipal Income |
| ( PMF ) |
| -2.79% |
| 5.09% |
| 1.12% |
| -1.4 |
| -1.59% |
| 0.00% |
| Calamos Strategic Total Return |
| ( CSQ ) |
| -2.54% |
| 8.91% |
| -2.41% |
| -1.2 |
| -1.92% |
| -1.88% |
| Gabelli Global Utility & Income |
| ( GLU ) |
| -2.33% |
| 8.20% |
| -10.59% |
| -1.1 |
| -2.91% |
| -1.28% |
| Morgan Stanley Emrgng Mkts Domestic Debt |
| ( EDD ) |
| -2.29% |
| 6.81% |
| -15.57% |
| -0.9 |
| -1.91% |
| -0.36% |
| Eaton Vance National Municipal Opprs Tr |
| ( EOT ) |
| -2.03% |
| 4.31% |
| -4.91% |
| 0.2 |
| -1.41% |
| 1.49% |
Conversely, individual CEFs that have undergone a significant increase in premium/discount value in the past week, coupled optionally with a decreasing NAV trend, a positive z-score, and/or are trading at a premium, are potential sell candidates.
| Fund |
| Ticker |
| P/D increase |
| Yield |
| P/D |
| z-score |
| Price change |
| NAV change |
| BlackRock Enhanced Government |
| ( EGF ) |
| 5.82% |
| 4.94% |
| -1.48% |
| 3.0 |
| 6.17% |
| -1.69% |
| PIMCO Dynamic Income Fund |
| ( PDI ) |
| 3.42% |
| 14.71% |
| 3.86% |
| -0.8 |
| 0.95% |
| -3.84% |
| XAI Octagon FR & Alt Income Term Trust |
| ( XFLT ) |
| 3.28% |
| 13.50% |
| 0.78% |
| -0.5 |
| 2.69% |
| -1.77% |
| BlackRock Long-Term Muni Advantage |
| ( BTA ) |
| 3.23% |
| 5.21% |
| -2.12% |
| -0.1 |
| 4.00% |
| -1.04% |
| NXG Cushing Midstream Energy Fund |
| ( SRV ) |
| 3.22% |
| 16.36% |
| -8.80% |
| 1.4 |
| 3.58% |
| -3.81% |
| JHancock Preferred Income |
| ( HPI ) |
| 3.12% |
| 9.43% |
| 5.43% |
| 1.7 |
| 2.67% |
| -1.26% |
| Guggenheim Strategic Opp Fund |
| ( GOF ) |
| 2.93% |
| 13.30% |
| 31.52% |
| 1.6 |
| 2.59% |
| 0.00% |
| JHancock Preferred Income II |
| ( HPF ) |
| 2.90% |
| 9.30% |
| 7.71% |
| 2.0 |
| 1.79% |
| -0.27% |
| First Trust Inter Dur Pref & Income Fund |
| ( FPF ) |
| 2.89% |
| 8.23% |
| -9.31% |
| -0.3 |
| 3.02% |
| -0.92% |
| PIMCO Global StocksPLUS & Income |
| ( PGP ) |
| 2.78% |
| 10.82% |
| 5.96% |
| 0.9 |
| 0.41% |
| -1.02% |
New!
From our screener, here are the CEFs with the highest yields, widest discounts, and lowest 1-year z-scores:
From our screener, here are the CEFs with the best 1-year performance, highest premiums, and highest 1-year z-scores:
Recent corporate actions
These are from the past month. Any new news in the past week has a bolded date:
April 17, 2023 | Eaton Vance Closed-End Fund Merger Complete. ng Symbol)
Exchange Ratio
Eaton Vance Tax-Managed Buy-Write Strategy Fund (NYSE: EXD)
0.750447085
[ Merger approval ]
April 17, 2023 | Nuveen Municipal Closed-End Funds Announce Completion of Mergers.
April 10, 2023 | CBRE Global Real Estate Income Fund (NYSE: IGR) Announces the Preliminary Results of Rights Offering.
April 3, 2023 | Nuveen Intermediate Duration Municipal Term Fund Announces Termination and Liquidation with its operation. The liquidating trust is not expected to issue tax reporting on Form 1099 like NID but instead will follow trust reporting tax conventions and is expected to issue tax statements annually. The trust will be treated as a grantor trust for federal income tax purposes.
Upcoming corporate actions
These are from the past month. Any new news in the past week has a bolded date:
April 13, 2023 | Nuveen Preferred Closed-End Funds Announce Proposed Mergers.
March 30, 2023 | Center Coast Brookfield MLP & Energy Infrastructure Fund Announces Planned Reorganization .
March 27, 2023 | Kayne Anderson Energy Infrastructure Fund and Kayne Anderson NextGen Energy & Infrastructure Announce Proposed Merger.
March 22, 2023 | Board of First Trust Dynamic Europe Equity Income Fund Approves Conversion into an ETF .
Recent activist or other CEF news
These are from the past month. Any new news in the past week has a bolded date:
April 14, 2023 | BlackRock Closed-End Fund Share Repurchase Program Update . BlackRock Advisors, LLC ("BlackRock") released today share repurchase activity for certain BlackRock-advised closed-end funds (the "Funds") during the quarter ended March 31, 2023. The Funds have authorized open market share repurchase programs (the "Repurchase Programs") pursuant to which each Fund may repurchase, through November 30, 2023, up to 5% of its outstanding common shares in open market transactions. The Repurchase Programs seek to enhance shareholder value by purchasing Fund shares trading at a discount from their net asset value ("NAV") per share, which could result in incremental accretion to a Fund's NAV. Below is a summary of share repurchase activity over this past quarter and since the inception of each Fund's Repurchase Program:
Summary of share repurchase activity during the most recent calendar quarter ended March 31, 2023:
Income Lab
Income Lab
The amount and timing of any repurchases under each Fund's Repurchase Program will be determined either at the discretion of the Fund's management or pursuant to predetermined parameters and instructions subject to market conditions. There is no assurance that any Fund will repurchase shares in any particular amounts. A Fund's repurchase activity will be disclosed in its shareholder report for the relevant fiscal period. Any repurchases made under any Repurchase Program will be made on a national securities exchange at the prevailing market price, subject to exchange requirements and certain volume and timing limitations and other regulations under federal securities laws.
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Distribution changes announced this month
These are sorted in ascending order of distribution change percentage. Funds with distribution changes announced this month are included. Any distribution declarations made this week are in bold. I've also added monthly/quarterly information as well as yield, coverage (after the boost/cut), discount and 1-year z-score information. I've separated the funds into two sub-categories, cutters and boosters.
Cutters
Boosters
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Commentary
1. BlackRock shares repurchase update
BlackRock Inc. (BLK) has provided an update on their share repurchase activity. BlackRock have share repurchase programs in place for the majority of their CEFs, allowing them to repurchase funds when they are at discounts. This feature is positive and shows alignment between managers and shareholders, because BlackRock is doing this voluntarily rather than being pressured to do so by activists (although I doubt any activist would take on BlackRock!).
They key point to understand is that repurchasing shares reduces AUM and fee income for managers, but boosts the NAV/share for all shareholders via accretion.
It is encouraging to note that a sizable number of CEFs saw share purchases, with dollar amounts running up to the tens of millions. I also remember that in previous years when discounts were narrow, very few shares (if at all) were repurchased. This makes sense because the degree of NAV accretion is lower when the funds are repurchased at narrower discounts. The time to rebuy shares is when they are at wide discounts, such as now.
In their press release, BlackRock has also helpfully calculated the amount of NAV accretion that is provided by those purchases. To make this data even more useful, I've calculated the estimated NAV/share accretion and the percentage of shares repurchased this quarter.
The accretion amounts seem small, but remember that this for only one quarter of activity. For example, the biggest NAV accretion was +0.26% in a quarter for BIGZ, which annualizes to +1.04% per year which is a nice boost.
Among portfolio holdings, BOE saw +0.03% NAV/share accretion this quarter, while BMEZ gained +0.17% and BSTZ gained +0.16%. All three funds are held in the Tactical Income-100 portfolio.
Tickers with share repurchases with quarter: ( BGR ) ( BOE ) ( BGY ) ( BMEZ ) ( BSTZ ) ( BIGZ ) ( BCX ) ( BGT ) ( BFZ ) ( MUC ) ( MUJ ) ( MIY ) ( MPA ) ( BNY ) ( MHN ) ( MYN ) ( MVF ) ( MVT ) ( MUI ) ( MQT ) ( BLE ) ( MYD ) ( BFK ) ( MYI ) ( MUE ) ( MHD ).
For further details see:
Weekly Closed-End Fund Roundup: BlackRock Repurchases (April 30, 2023)