The story in closed-end funds in November has been the volatility in the municipal asset class. Municipal bond closed-end funds have experienced not only price losses, down 6.5% month-to-date (MTD) as of Nov. 16, but their discounts have widened out 3.53% on unusually high levels of volume. The market is reacting to investors’ perceived risk created by stressed budgets for most municipalities. Additionally, the uncertainties about future tax rates are weighing on the asset class.
Sector Round Up: Aside from municipal bond closed-end funds discounts, the RiverNorth Closed-End Fund Index (taxable closed-end fund index) widened 1.88% through mid-November. That wasn’t the case with all asset classes in the index. Specialized equity, real estate and hybrid asset classes narrowed 0.52%, 0.58% and 0.63% respectively through the middle of the month.
Fixed income saw widening across the board with investment grade widening 4.63%, multi-sector bonds widening 4.03% and high yield widening 5.48% MTD. Non-U.S. equity experienced significant widening as well at 2.37% MTD.