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By Jeremy Glaser and Cara Esser, CFA | 12-04-2012 02:00 PM

Looking Back on a Solid 2012 for CEFs

Almost every closed-end fund had a positive performance this year, though equity CEFs are trading a discount compared with fixed-income funds, says Morningstar's Cara Esser.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. I'm here today with Morningstar closed-end fund analyst, Cara Esser. We are going to take a look back at the year in closed-end funds.

Cara, thanks for talking with me today.

Cara Esser: Thanks for having me, Jeremy.

Glaser: So, let's take a look first just at the entire universe. Closed-end funds obviously have IPO'd. Sometimes they go away. Where did we end up? How many new funds came to market this year?

Esser: We had 20 new funds come to market this year. But the most interesting part of this is that the entire universe has actually shrunk this year. So, we end the year with about 600 closed-end funds, and we started the year with about 630 despite the 20 IPOs. And this is because we had a lot of mergers this year. A lot of single-state municipal funds, for example, merged to create larger funds. This was great for shareholders that could get better cost efficiencies by one larger fund as opposed to a bunch of smaller funds. So, that was a big trend that we saw this year.

The 20 IPOs this year was a little bit more than we had last year. There was about 18 last year, and the most notable IPO that we had this year was the PIMCO Dynamic Income, ticker PDI, That was notable for its size. It raised over $1 billion which was one of the largest that we've seen in recent history.

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