每周封闭式基金综述：新民主党进入危险区

18 out of 31 CEF sectors positive on price and 24 out of 31 sectors positive on NAV this week.

NDP is superbly overvalued and there is a significant risk of a distribution cut announcement in early August.

Munis lead while MLPs lag.

The

Weekly Closed-End Fund Roundup

will be put out at the start of each week to summarize recent price movements in closed-end fund [CEF] sectors in the last week, as well as to highlight recently concluded or upcoming corporate actions on CEFs, such as tender offers. Most of the information has been sourced from

or the

. I will also link to some articles from Seeking Alpha that I have found for useful reading over the past week. The searchable tag for this feature is "cildoc." Data is taken from the close of

Friday, July 26th, 2019

.

18 out of 31 sectors were positive on price (up from 13 last week) and the average price return was +0.12% (up from -0.18% last week). The leading gainers were Pennsylvania Munis (+1.71%), High Yield Munis (+1.67%) and U.S. Real Estate (+1.52%), while MLPs (-1.52%) lagged.

(Source: Stanford Chemist, CEFConnect)

24 out of 31 sectors were positive on NAV (up from 10 last week), while the average NAV return was +0.12 (down from -0.44% last week). The top sector by NAV was U.S. General Equity (+1.06%), followed by U.S. Real Estate (+0.91%). The weakest sector was MLPs (-1.82%).

(Source: Stanford Chemist, CEFConnect)

The top 3 sectors by premium were Preferreds (+2.94%), US Utilities (+2.70%) and Multisector Income (+1.51%), while the sector with the highest discount is Non-US Equity (-12.09%). The average sector discount is -5.54% (down from -5.53% last week).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest premium/discount increase is Pennsylvania Munis (+1.38%), while U.S. Growth & Income (-1.07%) showed the largest premium/discount decline. The average change in premium/discount was +0.01% (down from +0.24% last week).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest average 1-year z-score is Pennsylvania Munis (+1.98). This week only two sectors had a negative z-score, the lowest being Other No U.S. Equity (-0.32) and U.S. Energy/Resources Equity (-0.10). The average z-score is +0.74 (up from +0.81 last week).

(Source: Stanford Chemist, CEFConnect)

The sectors with the highest yields are MLPs (11.23%), global equity dividend (9.79%), Global Growth & Income (9.38%), Emerging Market Income (8.85%) and Covered Call (8.45%). Discounts and z-scores for the sectors are included for comparison. The average sector yield is +6.96% (same as last week).

(Source: Stanford Chemist, CEFConnect)

Individual CEFs that have undergone a significant decrease in premium/discount value over the past week, coupled optionally with an increasing NAV trend, a negative z-score, and/or are trading at a discount, are potential buy candidates.

(Source: Stanford Chemist, CEFConnect)

Conversely, individual CEFs that have undergone a significant increase in premium/discount value in the past week, coupled optionally with a decreasing NAV trend, a positive z-score, and/or are trading at a premium, are potential sell candidates.

(Source: Stanford Chemist, CEFConnect)

These are sorted in ascending order of distribution change percentage. Funds with distribution changes announced this month are included. Any distribution declarations made this week are in

bold.

I've also added monthly/quarterly information as well as yield, coverage (after the boost/cut), discount and 1-year z-score information. I've separated the funds into two sub-categories, cutters and boosters.

(Source: Stanford Chemist, CEFConnect)

(Source: Stanford Chemist, CEFConnect)

Recommended reads are in

bold

.

ADS Analytics presents High And Tight: Investment Options For A Rich Muni Market (Jul. 19)

Alpha Gen Capital presents PCI: The Increase In The Distribution Makes This The Best Investment In Your Portfolio (Jul. 22)

Alpha Male

presents

(Jul. 24)

Austrolib presents Collect Dollar Bills In Front Of A Steamroller With Oxford Lane Capital (Jul. 21)

Arbitrage Trader presents Weekly Review: High-Yield CEFs - PCF Announced Monthly Distributions (Jul. 23), Weekly Review: Municipal Bond CEFs - CCA With Approved Plan Of Liquidation And Termination (Jul. 24)

BOOX Research presents Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund: 2019 Mid-Year Review (Jul. 22), Guggenheim Enhanced Equity Income Fund: Mixed Record And High Risk (Jul. 23)

Closed End Fund Tracker presents Vertical Capital: Steep Discount But Complex History (Jul. 22)

Nick Ackerman presents ETO: Waiting For A Pullback For This Solid Fund (Jul. 22), ETV: An 8.58% Yield But We Need To Be Patient (Jul. 23), THQ: Buy This Fund Before Healthcare Sector Rebound (Jul. 25)

Power Hedge presents CEN: An Interesting, Leveraged Bet On Midstream (Jul. 26)

*Stanford Chemist presents Weekly Closed-End Fund Roundup: Sweeping Cuts To BlackRock Muni CEFs (Jul. 22)

Fear & Greed Trader presents S&P 500 Weekly Update: The Tug Of War Is In Full Swing As The S&P And Nasdaq Make New Highs (Jul. 27)

Jeff Miller presents Weighing The Week Ahead: 4 Risky Hurdles (Jul. 28)

Lance Roberts presents Whistling Past The $70 Trillion Debt Graveyard (Jul. 28)

Tortoise Energy Independence Fund (NDP) gained +3.99% in premium last week and ended the week with a premium of +26.05%. This is close to its all-time highs.

Of course, an energy-themed equity closed-end fund wouldn't normally deserve such a high valuation, so what's causing this premium? You probably guessed it - the yield! NDP yields a whopping 27.09% on market price (33.53% on NAV!) but it actually has

, so this yield is being fully funded by gains and ROC. Unfortunately, the effect of this destructive yield can be seen clearly from the fund's 1-year chart - NAV is down by a whopping -58.82% although price is down "only" -50.66% thanks to the fund's expanding premium.

Data by YCharts

While certain underperforming funds can trade at elevated premiums for years thanks to their fat yields, a catalyst for NDP's valuation collapse could be just around the corner: a distribution cut. This is why I remarked that NDP has entered the "danger zone"!

NDP's quarterly $0.4375 distribution, which has been maintained since inception of the fund in 2012, could be imminently slashed. It doesn't take a genius to figure out that a $1.75 annual distribution on an IPO NAV of $23.88 is much more easily supported than the same $1.75 annual distribution on the current NAV of only $5.11.

Last year's comparable distribution was announced on August 6, 2018. So holders in NDP only have a few days left to get out of the fund if they wish to sidestep the risk of the announcement. One can always buy back into the fund afterwards, although it should be mentioned that one possible risk is that the price of the fund could spike upwards if the distribution is maintained.

(August 13, 2019 update: As we predicted, Tortoise Energy Independence Fund's (NDP) cut happened. It was a massive -77% distribution cut, from $0.4375 to $0.10 per share quarterly. NDP is down by nearly -33% since we warned our members to get out of the fund. Remember, closed-end fund valuation matters! Helping members avoid such "bombs" is an important part of what we do in our service.)

I am/we are long THE PORTFOLIOS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure:

This article was first released to CEF/ETF Income Laboratory subscribers 2 weeks ago, so data may be out of date. Please check latest data before making investment decisions.