Closed-End Bargains Hard to Find

The median discount on closed-end bond funds narrowed 0.92 percentage points to 2.34% for the month. For the previous month, median discounts on those fixed-income funds had widened to 3.26% from 2.68% in January.

Discounts on equity closed-end funds tracked by Lipper narrowed 0.72 percentage points in March, the second-narrowest monthly median discount for that fund classification in the past 12 months. Domestic equity funds offered the lowest median discount of any Lipper class, finishing the month at a 0.97% discount, a major reduction from 2.21% in February.

The only group that saw widened median discounts -- World Equity Funds -- grew an eye-popping 181 basis points to 7.49%. Funds in that classification "saw a kind of minimeltdown," Roseen says.

"People got a little bit scared by the China Syndrome," he adds, referring to the Chinese market tumble at the end of February.

Most funds enjoyed improvements in price compared with net asset value. Individual discounts narrowed, premiums increased or premiums replaced discounts for 64% of all closed-end funds tracked by Lipper in March (71% of fixed income funds and 51% of equity funds).

"Discounts don't have a lot more room to narrow," Roseen says. Future levels are "going to be very market-dependent. People aren't going to buy up these closed-end funds if they expect the market to start tanking. I don't think we're there yet; even though the unemployment rate is down, new jobs are declining, and people are on the fence right now."

For the month, 36% of all closed-end funds traded at a premium, up from 30% in both January and February.