The Month In Closed-End Funds: December 2023

Summary

• For the second consecutive month, both equity (+3.42% on a NAV basis) and fixed income (+3.14%) CEFs on average posted plus-side returns.
• At month end, 9% of all CEFs traded at a premium to their NAV, with 9% of equity CEFs and 8% of fixed income CEFs trading in premium territory.
• Developed Markets CEFs (+6.45%), for the second straight month, outpaced the other classifications in the equity CEF universe for December.
• Emerging Market Hard Currency Debt CEFs (+5.47%), for the first month in five, outperformed the other classifications in the fixed income CEF universe.
• The municipal debt CEFs macro-group (+3.79%) outpaced its world income (+2.98%) and domestic taxable bond (+2.77%) CEF counterparts for the second month in a row.

For the month, 93% of all closed-end funds (CEFs) posted net-asset-value (NAV) based returns in the black, with 85% 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 3.42% and 3.14%, respectively, for December.

Lipper’s mixed-assets CEFs (+4.46%) macro-group—for the first month in three—outpaced its two equity-based brethren: world equity CEFs (+4.14%) and domestic equity CEFs (+2.89%). The Developed Markets CEFs classification (+6.44%) remained at the top of the equity leaderboard for the second straight month, followed by Convertible Securities CEFs (+5.88%) and Sector Equity CEFs (+5.10%).

For 2023, equity and fixed income CEFs finished solidly in the black on a NAV basis, rising 9.69% and 10.73%, respectively.

The municipal debt CEFs macro-group outpaced the other two macro-groups in the fixed income universe for the second consecutive month, posting a 3.79% gain on average, followed by world income CEFs (+2.98%) and domestic taxable bond CEFs (+2.77%). Investors pushed the High Yield CEFs (Leveraged) (+4.20%) classification to the top of the domestic taxable fixed income leaderboard for the first month in five, followed by Corporate Debt BBB-Rated CEFs (Unleveraged) (+4.00%) and Corporate Debt BBB-Rated CEFs (Leveraged) (+3.98%).

The median discount of all CEFs widened 28 bps to 11.97% for December—wider than the 12-month moving average median discount (10.81%). Equity CEFs’ median discount widened by 113 bps to 13.16%, while fixed income CEFs’ median discount narrowed by 26 bps to 11.11%.

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

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.