The first quarter of 2015 was a decent one for diversified closed-end fund (CEF) investors with the average fund up 2.03%. The continued decline in global interest rates was particularly beneficial to fixed-income CEFs which were up 3.04% for the quarter. While it was a volatile quarter for equities (particularly U.S. equities), the average equity CEF still managed to achieve a gain of 0.44% for the first three months of the year, although domestic equity CEFs were lower by 0.43%.
Leveraged municipal CEFs had a strong quarter (up 3.08%). As I wrote on 1/26/20151, given our Economic Team's forecast that both short- and long-term interest rates could begin to slowly rise this year, I prefer investors focus more on non-levered municipal CEFs (which tend to have less duration risk than leveraged municipal CEFs), while still providing attractive tax-free income as well as important balance in a portfolio. Non-leveraged municipal CEFs also had a strong first quarter of 2015, up 2.87%.
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Posted on Tuesday, April 21, 2015 @ 12:51 PM
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