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By Jeremy Glaser and Cara Esser, CFA | 07-11-2012 11:00 AM

A Midyear Look at Closed-End Funds

Although the asset class saw some changes during the first six months of 2012, the numbers were somewhat similar to those at the 2011 midpoint.

Jeremy Glaser: For Morningstar, I am Jeremy Glaser. We recently passed the half-way point in 2012. I am here with Cara Esser, a closed-end fund analyst, to get a state of the union of the closed-end fund universe. Cara, thanks for joining me.

Cara Esser: Thanks for having me.

Glaser: Let's just get a brief overview of what's happening with closed-end funds right now. How many new funds have we've seen launched? What kind of mergers have we seen? What are kind of some basic facts around that?

Esser: At the midpoint of this year, we have about 620 closed-end funds in the universe, and that's about the same as we were last year at the midpoint. This is despite the fact that so far this year we've had 12 closed-end funds launch, and this is mostly because we've also had a lot of mergers, a lot of open ending of funds, and some liquidation. So the base of the closed-end fund universe has remained relatively stable over the last year despite some new funds being launched.

Glaser: How about performance? Is anything interesting there?

Esser: In general, we saw pretty good performance for the first half of this year. It's very similar to last year in that about 90% of all the closed-end funds in the entire universe have had positive net asset value performances for the first part of the year; 95%, a little more, have had positive share price performances for the first half of the year. So it's a pretty good start to the year so far.

Glaser: What are some of the top performers and worst performers?

Esser: I don't think anyone would be surprised that a lot of top-performing funds invest in emerging markets. Three of the five of the top-performing funds focus on emerging markets, and two are health-care closed-end funds. So [one of] the very best-performing closed-end funds for the year to date through the half-way point of the year was Thai Fund, ticker TTF, and that fund had double-digit share price and net asset value returns for the year. It was also a top-performing fund last year at this point, as well.

The worst-performing funds mostly are in the energy and resources sectors. The single worst-performing fund was ASA Gold and Precious Metals, ticker ASA. This was also the worst-performing fund last year at this point, too.

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