The second quarter was a difficult one for diversified closed-end fund (CEF) investors. According to Morningstar, the average CEF was lower by 3.70% on a share price total return basis. Most categories of the CEF marketplace experienced share price total return weakness during the second quarter and that is reflected in the fact that, according to Morningstar, all equity CEFs were lower by an average of 3.44%; all taxable fixed-income CEFs were down by an average of 3.40% and all municipal CEFs were lower by an average of 4.35%. While there are different reasons for the share price weakness depending on the specific category, in general the global increase in long-term interest rates during the quarter, coupled with volatile global equity markets (particularly during the last month of the second quarter), created a tough backdrop for many CEFs.
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