Closed-end Fund Review - First Quarter 2020
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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Posted on Thursday, April 23, 2020 @ 8:42 AM

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.