Sifting through the froth

BlackRock
By December 9, 2019 19:33

Sifting through the froth

Positive returns across asset classes in 2019 may limit tax loss selling in closed-end funds, but we see potential long term value in select sectors where investors can still buy assets at a discount.

2019 has been a strong year for closed-end funds (“CEFs”), with double-digit net asset value (“NAV”) returns in many sectors (Exhibit 1). Additionally, discounts have narrowed over the course of the year, driving market price outperformance versus NAVs. Positive market price returns may lead to fewer opportunities for investors to employ tax loss selling strategies in 2019. However, given the income focus of many CEFs, and the large distributions they pay out, the current market value may be lower than an investor’s cost basis, resulting in a capital loss. Moreover, CEFs held for more than one year may be in a capital loss position. Although tax loss selling may be limited compared to 2018, the fourth

BlackRock
By December 9, 2019 19:33

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