Company: FOF
Filing Date: 2025-03-07
Form Type: N-CSR
Source: 0001193125-25-049815
Chunk: 3

Company: Cohen & Steers Closed-End Opportunity Fund, Inc.
Filing Date: 2025-03-07
Form: N-CSR
Chunk 3
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 and taxable fixed income, which are the two largest segments of the CEF market drove the majority of our excess return for the year.

2

C OHEN& S TEERSC LOSED-E NDO PPORTUNITYF UND, I NC.

U.S. sector equity funds were the top contributors to relative performance. Underweight allocations to U.S. hybrid funds, as well as bank loan funds, were the primary detractors.

Funds with equity mandates produced healthy returns for the year. U.S. general equity funds and sector-focused U.S. equity funds were up nearly 23% and 12%, respectively. Security selection within sector-focused equities added to relative outperformance. An overweight to U.S. general equity funds and security selection within those funds also contributed positively. Security selection in option income funds further aided relative returns. The performance of these sectors more than offset an underweight allocation to U.S. hybrid funds and unfavorable security selection in global hybrid funds.

MLP funds led gains among closed-end funds, rising 56% on a market price basis and more than 43% on NAV. The category benefited from improving underlying midstream energy fundamentals. Notably, improved balance sheets paired with energy commodity prices that, while volatile, remained supportive of production plans. The Fund’s overweight to MLP funds was offset by adverse security selection detracting modestly from relative performance.

Commodity prices were mixed but rose for the year on balance. Countering relatively strong U.S. growth were concerns about prolonged high interest rates and China’s lackluster economic outlook, which dampened short-term demand for commodities there. The Fund’s selection in diversified commodity funds and single commodity funds (which primarily invest in gold and silver) contributed to relative performance.

Taxable fixed income funds gained as a significant narrowing of credit spreads positively impacted credit-sensitive sectors. Convertible bond funds led the category due to a conducive movement in equity markets and significant contractions in discounts to NAV. However, our avoidance of the category (in favor of equity funds) modestly detracted from relative performance.

Overall, the average discount to NAV for taxable fixed income funds moved from a discount to a modest premium. Security selection within global income funds and an underweight to taxable municipal bonds both contributed to the Fund’s outperformance. Having no investment in short-duration bond funds, U.S. investment-grade bond funds and U.S. government bond funds also contributed. However, the benefits were largely offset by adverse security selection in bank loan funds and having no position in collateralized loan funds.