Risk on again, it seems. The NASDAQ and the Russell 200 were both up > 3% this week. The S&P was up 1.6%. But anything related to hard assets didn't do so well. Utilities (XLU) dropped 1.4%, energy (XLE) dropped 5.8% and the midstreams and MLPs I track also dropped - down 1.8% on a simple average, down 0.8% on a market cap weighted average. 1 high priced MLP that I track (UAN, it has nothing to do with midstream) dropped $ 10 and that drove the difference between the simple average and the market cap weighted average. I don't think any MLP CEF owns UAN, so go with the 0.8% drop.
On an NAV basis, the average MLP CEF dropped 1%. CEN, which Guyute2 mentioned this week, actually rose 0.7% - it was the only MLP CEF that rose in NAV. CEN has a large allocation to a private partnership, and I wonder if they only update that investment's value at month's end. If that's the case, it would explain the NAV rise. The bottom performers were NML, down 2.5%, and the Clearbridge funds, down around 1.5%, but just about all the funds were down around 1%.
Discounts shrunk a little, so the average fund was down only 0.3%, and a number of funds were up slightly in price. NML, in particular, saw its discount shrink almost 4 % points, and its price rose on the week, although its NAV dropped 2.5%. KMF was the best price performer and KYN was the worst. A little unusual, I thought.
I have to say that I admire gjunk3 for his ability to follow dozens of funds. I mostly limit myself to the MLP sector (although I own other funds) and I continually miss developments. So thanks to Guyete2 for pointing out that Saba had a large position in CEN. I don't follow CEN closely because I really don't like CEFs with large positions in private companies. (Inconsistency - I own CET specifically because of its large position in Plymouth Rock.) But it certainly seems that Saba has had an effect on CEN. I don't think it will be merged into RA because RA mostly owns debt securities, but we'll see. CEN has a 14% discount to NAV just now, and I figure that if I bought $ 10,000 worth, I might make $ 1,400 if they liquidate or merge into an open-ended fund, but in the meantime I'd be exposed to the risks of CEN's portfolio. So I'm on the sidelines with that one, if anyone cares.
Speaking of Saba, they filed a preliminary proxy to start the fight at EMO, and that taught me something else. EMO has a staggered board (I didn't know that), and 3 or the 7 directors are elected by the preferred shareholders, who presumably don't care about the common stock discount to NAV. It would take 3 years to get all 3 common stock directors, so I'm not sure how productive the upcoming directors' election will be.
One last comment, about NML. Because it dropped so much this week, I looked at its portfolio and was a bit surprised. It is structured as a taxable corporation so it can invest as much as it wants in MLPs. But 2/3 of its investments are in corporations, so it isn't too much over the RIC limit. It has a fairly large (15%) allocation to E&P corporations, like AR, DEN and COP. That probably hurt the weekly performance. And much to my surprise, it owns units in FUN - FUN is an MLP that runs a chain of amusement parks around the country. I didn't think any MLP CEF owned any FUN. But like I said, I miss a lot of stuff about these funds.
