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CEF Specialist

Commodities CEFs Tank in September

The Bond King's departure had a small impact on CEF performance compared with the onslaught in the commodities market.

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The unexpected departure of PIMCO founder and chief investment officer Bill Gross dominated the headlines at the end of September, but PIMCO investors were far from the most disappointed folks last month. Gold prices dropped 6% in September, continuing a months-long decline from its mid-March high of $1,391.77 per ounce. Since that high, gold prices have fallen more than 13% through the third quarter. The strengthening of the U.S. dollar and improving economy also put pressure on the prices of other precious metals and commodities like oil and gas. This price pressure landed the equity precious metals closed-end fund Morningstar Category at the top of the worst-performing funds list during September and affected other commodities-sensitive categories such as natural resources, Latin America stock, commodities precious metals, equity energy, and emerging markets stock.

Best- and Worst-Performing CEF Categories
Commodities weren't the only disappointing sector last month; few categories performed well. And the two best-performing categories are small. There's only one market-neutral CEF--Eaton Vance Tax-Advantaged Bond & Option (EXD)--and two CEFs in the India equity category--India Fund Income (IFN) and MS India Investment (IIF). India's stock market has been on a tear this year, with the S&P Bombay Stock Exchange SENSEX Index gaining more than 25% for the year to date through September. Interestingly, investors bid up the share prices of the India equity funds despite flat net asset value performance over the month. The table below highlights the best- and worst-performing categories for September.

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Cara Esser does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.