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Jeff Margolin
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  Closed-end Fund Review - Fourth Quarter 2021
Posted Under: CEFs
Fourth Quarter 2021 and 2021 Overview

Following the third quarter, when the average closed-end fund (CEF) returned -1.25%, CEFs rebounded during the fourth quarter with the average CEF returning +2.38%. This helped push the average CEF to return a very solid +16.32% for 2021. It was a broad rally in the fourth quarter with equity CEFs returning an average of +4.77%, fixed-income CEFs returning an average of +0.79%, municipal CEFs returning an average of +0.88% and taxable fixed-income CEFs returning an average of +0.67%.

The full year 2021 results are particularly impressive with the average CEF returning +16.32%. Equity CEFs returned an average of +27.28%, fixed-income CEFs returned an average of +10.01%, municipal CEFs returned an average of +8.10% and taxable fixed-income CEFs returned an average of +11.49%.

For 2021, CEF performance was boosted by a significant narrowing of discounts to net asset value (NAV), more on that below, and very strong performance across the equity markets and key credit sensitive fixed-income indices. Indeed, for the year, equity CEFs benefitted from a 28.68% gain in the S&P 500 Index as well as the 7.82% gain in the MSCI All-Country World Ex US Index (Source: Bloomberg). Many key fixed-income indices also posted strong performance in 2021 and helped the performance of several taxable fixed-income categories of the CEF marketplace. For example, for 2021 the ICE BofA High-Yield Bond Index returned +5.35% and the S&P/LSTA Leveraged Loan Index returned +5.20% (Source: Bloomberg). The solid underlying performance of the senior loan and high-yield markets helped two of our favored fixed-income CEF categories (senior loan and limited-duration) post very strong performance results for 2021. Indeed, for 2021 senior loan CEFs returned an average of +20.67% and limited-duration CEFs returned an average of +13.19%.

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Posted on Wednesday, January 19, 2022 @ 2:03 PM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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