The third quarter was another solid period for diversified closed-end fund ("CEF") investors. The average CEF was up 2.37% for the quarter and is now up 13.01% year-to-date. Equity CEFs were positive on average by 3.79%, taxable fixed-income CEFs were up on average 5.04%; municipal CEFs, on the other hand, were lower on average by -0.84% for the quarter. (Source: Morningstar. All data is share price total return data). As I mentioned last quarter, after grinding through a challenging 2015 (particularly the back half of the year), diversified CEF investors have been rewarded with very strong total returns year-to-date (YTD). Many of the factors which benefited several categories of the CEF marketplace the first half of 2016 were also present during the third quarter including: higher equity prices (particularly U.S. equities), continued "Plow Horse" (as our Economics Team phrases it) economic growth in the U.S. economy (which helps to create a positive backdrop for many credit-sensitive CEFs), and high distributions and attractive discounts to net asset values (NAVs). This was particularly true for equity and credit-sensitive categories, which also helped to attract buyers to the secondary market during the quarter.

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