Weekly Closed-End Fund Roundup: ECC And OXLC Lose Air

21 out of 31 CEF sectors positive on price and 29 out of 31 sectors positive on NAV this week.

MLPs are the highest-yielding CEF sector.

ECC and OXLC funds lose air - our CLO analyst Alpha Male called this drop.

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 on

Friday, August 30th, 2019

.

21 out of 31 sectors were positive on price (up from 12 last week), and the average price return was 0.54% (up from -0.16% last week). The leading gainers were Latin American Equity (+3.07%), MLPs (+2.51%) and U.S. Energy/Resources Equity (+2.23%), while Emerging Market Income (-1.48%) lagged.

(Source: Stanford Chemist, CEFConnect)

29 out of 31 sectors were positive on NAV (up from 12 last week), while the average NAV return was 0.97% (up from -0.22% last week). The top sector by NAV was U.S. Energy/Resources Equity (+3.03%), followed by MLPs (+2.89%). The sole losing sector was Emerging Market Income (-1.08%).

(Source: Stanford Chemist, CEFConnect)

The top 3 sectors by premium were Preferreds (+3.07%), US Utilities (+1.83%) and Multisector Income (+0.98%), while the sector with the highest discount was Emerging Market Equity (-13.10%). The average sector discount was -5.95% (down from -5.53% last week).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest premium/discount increase was High Yield Munis (+1.12%), while Global Equity Dividend (-1.61%) showed the largest premium/discount decline. The average change in premium/discount was -0.40% (down from 0.04% last week).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest average 1-year z-score was Pennsylvania Munis (+1.53), followed by California Munis (+1.524). The lowest z-score was for Emerging Market Equity (-1.03), followed by Asia Equity (-0.71). The average z-score was +0.43 (down from +0.59 last week).

(Source: Stanford Chemist, CEFConnect)

The sectors with the highest yields were MLPs (12.68%), global equity dividend (10.10%), Global Growth & Income (9.71%), Emerging Market Income (9.55%) and Covered Call (8.74%). Discounts and z-scores for the sectors are included for comparison. The average sector yield was +7.14% (down from +7.17% 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)

ADS Analytics presents AIF: A High-Yielding Option For An Extended Credit Cycle (Aug. 26)

Alpha Gen Capital presents One Of The Best Options In The Muni Space For 4.43% Tax-Free: NAD (Aug. 27), YH Fund Spotlight: Guggenheim Taxable Muni (Aug. 28)

Arbitrage Trader presents Weekly Review: High-Yield CEFs - Positive Performance From The Sector (Aug. 27), Weekly Review: Municipal Bond CEFs - A Slight Decline From The Record Highs (Aug. 28)

Arturo Neto presents Our Favorite REIT CEF Is The Cohen & Steers Total Return Realty Fund (Aug. 24)

The Balance of Trade presents Star Bond Fund Manager Michael Hasenstab Hits A Rough Patch - I'm Looking At His Fund (Aug. 29)

Closed End Fund Tracker presents Bulldog Investors: Updates To The CEF Activist's Portfolio (Aug. 30)

Dividend Seeker presents RCS: Too Darn Expensive (Aug. 26), NMZ: The Muni Story Remains Positive, But Be Careful (Aug. 28)

Douglas Albo presents Equity CEFs: A Fund To Survive The Trade War (Aug. 26)

George Spritzer presents Fund Merger Provides Backdoor Way To Invest In Infrastructure (Aug. 24)

Matthew Utesch presents A Comparison Of 3 Infrastructure CEFs - Why We Chose To Add UTF To Our Client's Portfolio (Aug. 28)

Nick Ackerman presents RNP: 6.68% Yield And Still At An Attractive Discount (Aug. 26*), NRO: REIT And Preferred-Focused CEF At A Discount (Aug. 26)

Power Hedge presents HQH: Ride Out The Market Volatility With This Healthcare CEF (Aug. 27)

Real-Time Retired Guy presents Closed-End Funds: Diversification - But At A Price(Aug. 30)

Stanford Chemist presents Weekly Closed-End Fund Roundup: DDF Crashes (Aug. 28*)

Fear & Greed Trader presents S&P 500 Weekly Update: This Bull Market May Be In Jeopardy (Aug. 31)

Lance Roberts presents Breaking Down The Bull/Bear Argument (Sep. 1)

Eagle Point Credit Company (ECC) fell -9.96% and Oxford Lane Capital Corp. (OXLC) fell -6.98% this week on no apparent news - except for maybe this bearish article, which I don't wish to comment on particularly (there are both merits and flaws in its analysis, in my opinion). However, I still do want to commend Alpha Male for calling out the overvalued nature of these funds in his first article for the Lab:

This turned out to be a great call, as ECC and OXLC both rapidly shed their excess premiums afterwards and now sit over -12% lower in price than when Alpha Male first issued the trim call around a month and a half ago.

Members now have the opportunity to buy both funds back at a much cheaper prices, effectively "gaining" the equivalent of 10 months'

(ECC)

or 8 months'

(OXLC)

worth of dividends in the process!

Data by YCharts

Are we pretending that we played this move perfectly? No, we're not. We only trimmed ECC in our

portfolio, and didn't sell it completely. Moreover, we still held onto OXLC in our

portfolio believing it to be not

overpriced. This is because we try not to be "all in" or "all out" in any decision in order to reduce risk. (Although we did sell OCCI completely to sidestep the rights offering, which was a very profitable move!)

However, it's important to point out we didn't add any to any of our CLO positions either, even while other authors were strongly recommending these securities - we stuck to our discipline and did not put any new money into funds that were above the top end of the "Hold" range. This might serve as a lesson in patience to our newer members - you can nearly always get better prices by waiting for a better entry point, saving the equivalent months (or even years) of distributions in the process.

Remember,

when buying closed-end funds!

Are ECC and OXLC back into the Buy range? With premiums of between 15% and 20%, they are technically still overvalued, according to our algorithm. However, they might be worth a nibble or two should weakness persist, if we accept the premise that CLO equity prices are undeservedly priced too low. In the meantime, OCCI is also looking quite good for an entry point now that we know the extent of dilution, but it might be worth waiting until the new shares hit the market before buying - both in terms of subscribers wanting out and the NAV hit being processed on the shares. Another good option is the XAI Octagon Floating Rate & Alternative Income Term Trust (XFLT), which Alpha Male recently profiled for Income Lab members here: "XFLT Continues To Impress".

I am/we are long THE MODEL 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.