CEF Weekly Review: Approaching Tax-Loss Season

Summary

• We review the CEF market valuation and performance through the first week of October and highlight recent market action.
• CEFs mostly rose this week, led by Munis, due to discount tightening, while equity-linked sectors remain year-to-date outperformers.
• Tax loss harvesting season is approaching, with CLO Equity hit hardest, but further volatility is expected to be muted, as investors rotate within the sector.
• Distribution trends reflect lower short-term rates and tax-exempt distribution normalization; leveraged CEFs benefit from falling leverage costs, except for CLO Equity funds.
• Franklin Templeton announced a share repurchase program for select CEFs, signaling management focus on price performance, though Muni fund discounts persist.