July began with a good jobs report, followed by more worries over Federal Reserve “tapering” and a jump in oil prices. Still, the equity closed-end fund macro-group tracked by Lipper posted plus-side returns on both a net-asset-value (NAV) and a market basis during the month, with returns of 2.91% and 2.04%, respectively. Fixed-income closed-end funds, though, were hurt by fears over rising interest rates andDetroit’s bankruptcy filing; they posted their third-consecutive month of negative returns, down 0.74% in July on a NAV basis and 3.99% on a market basis, according to the Denver-based research group.
In July, 15% of all closed-end funds traded at a premium, while 17% of equity funds and 13% of fixed-income funds did so relative to their NAVs. In addition, none of Lipper’s CEF macro-groups experienced a narrowing of their discounts.
All of Lipper’s equity and taxable fixed-income CEF groups had positive returns in July, though the municipal bond fund groups did not. National municipal bond funds declined 2.48%, and single-state municipal debt funds fell 2.52%.
For July, 61% of all closed-end funds posted positive NAV-basis returns; a strong majority, 89%, of equity CEFs did so, but only a minority, 43%, of fixed-income CEFs were able to stay out of the red.
In terms of global investing, world-equity closed-end funds improved 2.48% for the first month in three, reflecting good news about purchasing in Europeand other factors. This put the group in the middle of the top-performing equity macro-group—between domestic equity CEFs, which rose 3.36% and the mixed-asset CEFs macro-group, which moved up 2.09% for the month.
With a strong mix of concerns affecting fixed-income investments, the municipal bond funds macro-group saw its performance drop 2.50%; it underperformed taxable domestic bond CEFs, which rose 1.46% on a NAV basis, and world bond CEFs, which were up 0.74%, according to Lipper.
“Only 25 equity CEFs posted returns in the red for July, with 16 of the 25 being housed in Lipper’s world-equity funds macro-group,” said Tom Roseen, head of research services for the Denver-based research group.
Categories with good performance included convertible securities funds, 4.14%; core funds, 4.14; and value funds, 3.91%. Some sectors with weaker performance in July were emerging-markets funds, 0.71%; real-estate funds, 0.93%; and income and preferred stock funds, 1.26%.
In terms of top-performing individual funds, H&Q Healthcare Investors (HQH), gained 12.52% on a NAV basis in July and traded at a 0.44% discount at month-end. This was followed by H&Q Life Sciences Investors (HQL), which had a 12.05% return and traded at a 1.62% discount on July 31.
Also notable was ASA Gold & Precious Metals Limited (ASA), a laggard in June that moved up 10.18% on a NAV basis in July and traded at a 5.21% discount at month-end. Central Gold Trust (GTU) produced a 10.07% return and traded at a 3.01% discount at the end of July, while BlackRock Health Sciences Trust (BME) rose 8.26% and traded at a 1.42% discount on July 31.
“The 20 top-performing equity funds posted returns in excess of 6.03%, while the 20 lagging funds were at or below minus 0.27%,” Roseen explained.