The Month In Closed-End Funds: February 2024

Summary

• For the third month in four, equity CEFs (+1.81%) witnessed gains while their fixed income CEF (+0.52%) counterparts for the fourth month in a row posted plus-side returns.
• At month end, 13% of all CEFs traded at a premium to their NAV, with 13% of equity CEFs and 13% of fixed income CEFs trading in premium territory.
• Energy MLP CEFs (+4.86%), for the first month in 18, outpaced the other classifications in the equity CEF universe for February.
• Emerging Markets Hard Currency Debt CEFs (+2.12%), for the second month in three, outperformed the other classifications in the fixed income CEF macro-group.
• The world income CEFs macro-group (+1.00%) outperformed its domestic taxable bond (+0.56%) and municipal debt (+0.29%) CEF counterparts for the first month in four.

For the month, 79% of all closed-end funds (CEFs) posted net-asset-value (NAV) returns in the black, with 77% of equity CEFs and 81% of fixed income CEFs chalking up returns in the plus column. The average equity and fixed income CEF posted a NAV-based gain of 1.81% and 0.53%, respectively, for February.

Lipper’s world equity CEFs (+2.48%) macro-group—for the third month in four—outpaced its two equity-based brethren: domestic equity CEFs (+1.73%) and mixed-assets CEFs (+1.31%). The Energy MLP CEFs classification (+4.86%) moved to the top of the equity leaderboard for the first month in 18, followed by Emerging Markets CEFs (+3.73%) and Natural Resources CEFs (+3.38%).

The world income CEFs macro-group outpaced the other two macro-groups in the fixed income universe for the first month in four, posting a 1.00% gain on average, followed by domestic taxable bond CEFs (+0.56%) and municipal debt CEFs (+0.29%). Investors pushed the Loan Participation CEFs (+0.91%) classification to the top of the domestic taxable fixed income leaderboard for the first month in four, followed by High Yield CEFs (+0.82%) and High Yield CEFs (Leveraged) (+0.67%).

For February, the median discount of all CEFs narrowed 20 bps to 9.89%—narrower than the 12-month moving average median discount (11.07%). Equity CEFs’ median discount widened by 43 bps to 11.73%, while fixed income CEFs’ median discount narrowed by 46 bps to 8.68%.

In this report, we highlight February 2024 CEF performance trends, premiums and discounts, and corporate actions and events.