Most Closed-End Funds’ Prices Beat Indexes

The market price of most closed-end funds this year has outperformed their respective indexes even as the funds’ net asset value has not, according to a recent Citigroup research report.

The market price of most closed-end funds this year has outperformed their respective indexes even as the funds’ net asset value has not, according to a recent Citigroup research report. In the large-cap space, for example, closed-end funds’ market prices increased 13.5% compared to 9.8% by the Standard & Poor’s 500, while NAVs increased just 8.1%. Overall, closed-end fund market price increase 9.4%, while NAVs grew just 6.5%.

Wachovia noted recently the narrowing of discounts and generally strong performance of closed-end funds this year, citing a lack of issuance and solid equity performance across the market (www.fundaction.com, 10/6). UBS has predicted that tax-loss selling, which aggravated closed-end fund discounts last year, will be light in the coming months (www.fundaction.com, 10/13).

The issue is a critical one for the funds as they are often criticized for the steep discounts at which many trade.