Guido Mieth
Author’s note: This article was released to CEF/ETF Income Laboratory members on December 19, 2022. 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, December 16th, 2022.
Weekly performance roundup
2 out of 23 sectors were positive on price (same as last week) and the average price return was -1.28% (up from -2.41% last week). The lead gainer was Preferreds (+1.20%) while Asia Equity lagged (-2.63%).
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2 out of 23 sectors were positive on NAV (down from 4 last week), while the average NAV return was -0.78% (up from -1.32% last week). The top sector by NAV was Preferreds (+0.22%) while the weakest sector by NAV was U.S. Equity (-2.62%).
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The sector with the highest premium was Covered Call (-2.31%), while the sector with the widest discount is MLPs (-15.13%). The average sector discount is -7.08% (down from -6.65% last week).
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The sector with the highest premium/discount increase was Real Estate (+0.83%), while Limited Duration (-2.72%) showed the lowest premium/discount decline. The average change in premium/discount was -0.41% (up from -0.81% last week).
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The sector with the highest average 1-year z-score is MLPs (+0.33), while the sector with the lowest average 1-year z-score is Single-state Munis (-1.65). The average z-score is -0.61 (down from -0.49 last week).
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The sectors with the highest yields are Asia Equity (13.52%), Emerging Market Income (+11.72%), and Senior Loans (+11.71%). Discounts are included for comparison. The average sector yield is 8.84% (up from 8.72% last week).
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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 |
| PCM Fund | (PCM) | -10.19% | 11.91% | 14.33% | -0.9 | -6.39% | -0.56% |
| OFS Credit Company Inc | (OCCI) | -9.60% | 26.32% | -7.21% | -0.1 | -19.62% | 0.00% |
| PIMCO Dynamic Income Opportunities Fund | (PDO) | -8.57% | 11.47% | -3.38% | 1.0 | -10.62% | -7.46% |
| BNY Mellon Muni Bond Infrastructure Fund | (DMB) | -8.06% | 4.54% | -11.33% | -1.3 | -7.04% | -0.25% |
| Eagle Point Income Co Inc | (EIC) | -7.03% | 11.93% | 12.30% | 0.7 | -7.19% | 2.88% |
| PIMCO NY Municipal Income III | (PYN) | -6.56% | 6.11% | 1.31% | -1.0 | -5.68% | 0.44% |
| Eaton Vance National Municipal Opprs Tr | (EOT) | -6.09% | 4.45% | -7.87% | -1.0 | -5.87% | 0.38% |
| Cornerstone Strategic Value | (CLM) | -5.65% | 27.43% | 16.84% | -1.1 | -6.28% | 0.00% |
| Western Asset Mortgage Opp Fund Inc. | (DMO) | -5.37% | 11.29% | -14.21% | -1.2 | -2.74% | 0.41% |
| PIMCO Strategic Income Fund | (RCS) | -5.36% | 11.86% | 17.08% | 1.1 | -4.44% | 0.91% |
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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 |
| Eagle Capital Growth | (GRF) | 10.64% | 4.02% | -2.18% | 1.2 | 3.25% | -2.99% |
| Gabelli Utility Trust | (GUT) | 7.44% | 8.21% | 103.06% | 1.3 | 2.09% | -1.64% |
| Nuveen CA Select Tax Free Income | (NXC) | 6.84% | 3.62% | 1.94% | 0.4 | 5.30% | 0.00% |
| Cohen & Steers REIT & Preferred Inc Fd | (RNP) | 5.44% | 7.38% | 9.24% | 3.1 | 2.89% | -2.22% |
| Nuveen Core Equity Alpha | (JCE) | 4.85% | 11.29% | 14.86% | 2.5 | 0.43% | -4.89% |
| Tekla World Healthcare Fund | (THW) | 4.49% | 9.24% | 15.56% | 1.5 | 1.54% | -2.38% |
| Gabelli Healthcare & Wellness Trust | (GRX) | 4.32% | 5.79% | -12.56% | -0.1 | 3.18% | -1.90% |
| Doubleline Opportunistic Cred | (DBL) | 4.09% | 8.88% | 1.22% | 1.4 | 3.99% | 0.00% |
| BlackRock Resources&Commodities Strategy | (BCX) | 3.68% | 6.40% | -12.04% | -0.9 | 2.32% | -1.95% |
| RiverNorth Managed Duration Muni Inc Fd | (RMM) | 3.51% | 7.34% | -5.53% | -0.6 | 1.74% | -0.79% |
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Recent corporate actions
These are from the past month. Any new news in the past week has a bolded date:
December 16, 2022 | Delaware Investments National Municipal Income Fund announces final results of tender offer.
December 8, 2022| First Trust/abrdn Emerging Opportunity Fund Announces Termination and Liquidation.
November 10, 2022| RiverNorth Opportunities Fund, Inc. Announces Final Results of Rights Offering.
November 9, 2022 | Macquarie Global Infrastructure Total Return Fund Inc. announces results of the special stockholder meeting relating to the proposed reorganization with abrdn Global Infrastructure Income Fund.
November 9, 2022 | Delaware Ivy High Income Opportunities Fund Announces Results of the Special Shareholder Meeting Relating to the Proposed Reorganization With abrdn Income Credit Strategies Fund.
Upcoming corporate actions
These are from the past month. Any new news in the past week has a bolded date:
December 12, 2022 | Delaware Enhanced Global Dividend and Income Fund Announces Results of the Special Shareholder Meeting Relating to the Proposed Reorganization With abrdn Global Dynamic Dividend Fund and Self-Tender Offer for up to 30% of Its Shares.
December 1, 2022 | Delaware Enhanced Global Dividend and Income Fund announces potential self-tender offer for up to 30% of its shares.
November 30, 2022 | Delaware Investments® Dividend and Income Fund, Inc. Announces Results of the Special Shareholder Meeting Relating to the Proposed Reorganization With abrdn Global Dynamic Dividend Fund.
November 9, 2022 | Eaton Vance Closed-End Funds Announce Proposed Merger.
Recent activist or other CEF news
These are from the past month. Any new news in the past week has a bolded date:
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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. 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
None
Boosters
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Commentary
1. VFL tender offer results
Delaware Investments National Municipal Income Fund (VFL) announced their tender offer results. The offer expired on December 13, 2022. We discussed this when the offer first went live in a previous CEF Weekly Roundup.
The offer was for 50% of shares at 99% of NAV. This is a huge repurchase offer, and obviously no CEF manager would voluntarily give up 50% of their AUM. As we previously explained:
Of course, the Delaware managers are not conducting this tender offer willingly, as they would be giving up as much as 50% of their AUM (and fee income). The tender offer is a likely compromise to placate Saba, who might have pushed for complete liquidation of the fund. 50% of AUM remaining is better than 0%, am I right? In return for the fund conducting this tender offer, Saba has agreed to customary standstill provisions, which include tendering all of their shares and not push for further changes to the fund going forward.
The discount narrowed to around -3% when the tender offer was announced, making any alpha to the -1% discount level (i.e., 99% of NAV) slim. Indeed, the discount narrowed to -2.49% the day before the tender offer expired, meaning that only around 1.5% profit was available from the tendered shares, balanced against the risk of capital loss from the shares that are not accepted for tender as they fall back towards their long-term average discounts. As we previously wrote:
However, if more than 50% of shareholders tender their shares, then each investor would be subject to proration. The risk then is that the shares that are not accepted for repurchase by the fund would drop back to their historical discount upon expiry of the offer, saddling the investor with capital losses. For reference, the 3- and 5-year average discounts are -9.41% and -10.29% respectively.
Lo and behold, the risk that I had feared did not come to pass. Only 41.41% of shareholders tendered their shares (and were the other 59% thinking?!), so there was no pro-ration. Then, VFL shares dutifully crashed as soon as the offering was offer, as the shares are now instantly become valuable without the tender offer attached.
YCharts
This is why investors in CEFs should monitor their holdings for any corporate actions that may come up. There’s no point in leaving free money on the table like this. Of course, this is something that we try to help our members keep track of too at the Income Lab!
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
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