FIRST QUARTER 2020 OVERVIEW
It was an extremely challenging quarter for the closed-end fund (CEF) marketplace. The average fund was lower by 23.46%. All the broad CEF categories tracked by Morningstar were lower for the quarter. The average equity CEF was lower by 36.24%, taxable fixed-income funds were lower by 23.02%, all fixed-income funds were down by 15.77% and municipal CEFs declined on average 7.25% (source: Morningstar. All performance is based on share price total return).
Concerns about the Coronavirus and the significant negative impact it will have on the global economy led to a severe sell-off across most equity and credit markets.
The S&P 500 Index declined 19.60% during the first quarter.
The ICE BofA High-Yield Bond Index declined 13.13%.
The S&P/LSTA Leveraged Loan Index dropped 13.05%.
The ICE BofA Preferreds Index was lower by 8.83%.
The ICE BofA 7-12 Yr Municipal Index declined 0.78%.
The negative performance across many key equity and fixed-income asset classes, the use of leverage by many CEFs and discount widening all helped to contribute to the very challenging quarter for CEFs (source: Bloomberg, as of 3/31/20. Index performance is based on total returns).
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