Following a very strong fourth quarter of 2020 when the average closed-end fund (CEF) increased by 12.75% (https://www.ftportfolios.com/Commentary/Insights/2021/1/22/fourth-quarter-2020), CEFs continued their positive momentum and gained 6.42% for the first quarter of 2021. It was a broad rally with equity CEFs rising 11.94%, fixed-income CEFs gaining 3.36%, municipal CEFs increasing 1.72% and taxable fixed-income CEFs growing 4.71%. Equity CEFs benefitted from the 6.17% increase in the S&P 500 Index as well as the 3.49% increase in the MSCI All-Country World Ex US Index. Fixed-income CEFs (particularly credit sensitive fixed-income CEFs) benefitted from strength in the underlying high-yield bond and leveraged loan markets. The ICE BofA High-Yield Bond Index was up 0.91% for the first quarter, while the S&P/LSTA Leveraged Loan Index gained 1.78%. Despite a decrease of 0.64% for the ICE BofA 7-12 Yr. Municipal Index during the quarter, municipal CEFs increased 1.72%—which, in my view, reflects the demand for the attractive 4.26% distribution yield the average municipal CEF provides. 

(Source: Morningstar. All performance is based on share price total return).

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