One of the side benefits of having constructed our closed-end fund indices is the ability to take a bird’s eye view on the entire CEF universe. Without these tools we are limited to a bottom-up analysis of individual funds which severly limits our analysis.
A visualization we find particularly interesting is a three-variable view across CEF sectors of Net AUM, Distribution Rate and Discounts. It provides a partial answer to the question of – which sectors look attractive right now given a particular yield target? It also gives investors information if they consider switching allocations across sectors.
An unmistakable pattern in the chart below is the positive correlation between distribution rates and discounts – higher “yielding” sectors tend to trade at a premium. That said, a few sectors do stand out – namely Global Equity, Global Hybrid and Limited Duration – these are worth a second look by investors.