The Month In Closed-End Funds: January 2023

For the month, 97% of all closed-end funds (CEFs) posted net-asset-value [NAV]-based returns in the black, with 93% of equity CEFs and 100% of fixed income CEFs chalking up returns in the plus column. For the second month in three, Lipper’s world equity CEFs (+7.86%) macro-group outpaced or mitigated losses better than its two equity-based brethren: mixed-assets CEFs (+6.77%) and domestic equity CEFs (+4.46%). Also for the second month in three, the Emerging Markets CEFs classification (+9.69%) moved to the top of the equity leaderboard, followed by Developed Markets CEFs (+9.30%) and Diversified Equity CEFs (+7.92%).

The municipal debt CEFs macro-group outpaced the other macro-groups in the fixed income universe for the second month in three, posting a 4.93% gain on average, followed by world income CEFs (+4.31%) and domestic taxable bond CEFs (+3.49%). For the first month in three, investors pushed High Yield CEFs (Leveraged) (+4.62%) to the top of the domestic taxable fixed income leaderboard, followed by Corporate Debt BBB-Rated (Leveraged) CEFs (+4.46%, December’s group laggard) and Corporate Debt BBB-Rated CEFs (+4.07%).

For the three-month period ended January 31, 2023, both equity and fixed income CEFs posted handsome returns on a NAV-basis, rising 7.68% and 8.56%, respectively.

The month-end median discount of all CEFs narrowed 157 bps to 8.35%—wider than the 12-month moving average median discount (7.80%). Equity CEFs’ median discount narrowed 213 bps to 8.62%, while fixed income CEFs’ median discount narrowed 143 bps to 8.18%.

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