The NAVigator

Nathan Briggs, a partner in the asset management practice at Ropes and Gray, discusses the burgeoning trend and inner workings of 'follow-on offerings' -- where closed-end funds raise additional capital and add to their outstanding shares -- and the mostly positive impact these actions have for shareholders.

Thomas DeCapo, partner at Skadden, Arps -- one of the largest law firms representing interests in the closed-end fund industry -- discusses developments and changes to the activist environment, noting that one thing he believes will not change is the high level of activity due to the many funds facing activists with stakes of 10 percent or more. DeCapo also discusses industry rumors that regulator...

Parth Doshi, vice president of closed-end funds at Nuveen, discusses the firm's new interval fund -- Nuveen Enhanced High Yield Municipal Bond Fund -- and how it compares to other closed-end funds. Muni bonds are a new area for the interval fund structure -- the Nuveen offering is just the second muni interval fund -- and Doshi discusses why investors might favor one structure over the other, or h...

Gaal Surugeon, portfolio manager at Brookfield Asset Management's Public Securities Group, says that investing in physical assets like infrastructure and real estate provides inflation protection with stabilized yield potential and long-term growth prospects tied to the economic cycle, but the short- and mid-term prospects for real assets is also attractive now, given the economic recovery, invest...

Stephen Hester, partner at Wide Moat Research and editor at the Intelligent REIT Options Advisor newsletter, offers his take on new developments within the business-development company realm, and compares how current market conditions are making BDCs an attractive alternative to real estate investment trusts, noting that the standard BDC cycle periodically makes them a buying opportunity -- especi...

Michael Spatacco, director at Bancroft Capital, says that the latest evolution in closed-end funds will have more impact on the closed-end fund business and the evolution of funds and how they are sold than exchange-traded funds had on the traditional mutual fund industry. In a wide-ranging discussion on the state of the closed-end fund business, Spatacco says that the ETF evolution mostly changed...

Matt Kence, portfolio manager for the Aberdeen Credit Income Strategies Fund (ticker ACP), says that the headwinds facing high-yield investors -- higher inflation and concerns over rising interest rates -- can be overcome with diligent security selection from the wider range of options available now thanks to record levels of bond issuance. Kence notes that if the economy delivers inflation and gr...

John Cole Scott, chief investment officer at Closed-End Fund Advisors and founding chairman of the Active investment Company Alliance, gives his take on wher business-development companies stand midway into earnings season and with the New Year just around the corner. He highlights four individual BDCs, talks about portfolio construction and highlights an upcoming BDC event that the Alliance will...

Larry Holzenthaler, an investment strategist and analyst at Nuveen who specializes in floating rate and high yield investments says that income-oriented investors who have allocations to junk bonds are likely under-allocated to loan funds, which offer equal returns with less risk. Holzenthaler says the floating-rate opportunities are particularly attractive in closed-end funds, thanks to persisten...

In this bonus edition of The NAVigator, John Cole Scott, chief investment officer at Closed-End Fund Advisors and executive chairman of the Active Investment Company Alliance again helps Chuck Jaffe answer audience questions, this time going into the nuts and bolts of how funds work to answer a complex inquiry about proxy votes, distribution decisions and how investors should view and respond to t...

Sam Brothwell, director of research at Energy Income Partners, says that the frothy market for energy has created solid opportunities for infrastructure plays, such as pipelines, storage facilities, and liquid natural gas logistics companies. Brothwell discusses the emergence of renewables, noting that while they hold tremendous potential, they are not replacing legacy energy sources for use, and...

In this bonus edition of The NAVigator, John Cole Scott, chief investment officer at Closed-End Fund Advisors and executive chairman of the Active Investment Company Alliance dispels the notion that closed-end funds are only suited for individuals in or near retirement age, investing in tax-advantaged accounts, helping host Chuck Jaffe answer a listener's question. He offers suggestions and creati...

Eric Chadwick, president and portfolio manager at Flaherty & Crumrine, says that at a time when investors are searching for yield and are being tempted to take on more risk to get it, preferred securities are shining, providing a relatively attractive return without adding danger to the portfolio. Chadwick notes that preferreds now are offering the best credit quality he has seen in years, and at...

Bryce Doty, senior portfolio manager at Sit Investment Associates, says that yield-hungry investors can pursue better payouts through closed-end funds without stretching dangerously for yield, though he notes they will want to diversify -- and offers a number of promising funds to fill those varied portfolio slots -- in order to better manage the risk that typically comes with pushing to get highe...

Erik Herzfeld, president of Thomas J. Herzfeld Advisors, says that investors are sacrificing returns for liquidity when they choose traditional mutual funds and ETFs instead of closed-end funds. The issue -- which arises due to the structures of the different fund types -- is a problem because most investors never even consider it; Herzfeld notes that most investors would be willing to trade liqui...

In this bonus edition of The NAVigator,  Jonathan Browne, director of research at Robinson Capital, talks about how closed-end funds can help investors meet their needs for income in ways that traditional fixed-income strategies are struggling to do given current rate levels. By managing duration and supplying above-market yield -- and by focusing on credit risk at a time when it is more worrisome...

James Thom, senior investment manager in Aberdeen's Asian equities team based in Singapore and portfolio manager for The India Fund, says that the country's economic recovery from Covid-19 has resulted in astronomical growth levels -- significantly higher than in the United States -- that have the potential to continue longer, since the recovery there is still in early stages. Still, with vaccinat...

Michael Ordonez, director of client portfolio management at Thornburg Investment Management, says that the biggest issue income investors face today is economic dynamics that are leading to a 'very difficult sustained income demand landscape, with less and less opportunities to generate that income.' That situation led Thornburg to enter the closed-end fund space for the first time with the Thornb...

Daniel Wildermuth, chief investment officer for the Wildermuth Endowment Fund -- an interval fund that uses an endowment-like investment strategy built around alternative investments -- discusses how private equity investments have not only weathered the storm of the pandemic, but have largely outperformed the broad stock market over the longer term, and how they can spark and diversify a portfoli...

The right mix of closed-end funds creates a quasi-bond, delivers steady ionJohn Cole Scott, chief investment officer at Closed-End Fund Advisors -- the founder/executive chairman of the Active Investment Company Alliance -- discusses what is involved in turning portfolios of closed-end funds into 'synthetic bonds,' delivering consistent returns above what is available in the fixed income markets,...

Roxanna Islam, associate director of research for Alerian and S-Network Global Indexes, discusses why her firm's indexes of closed-end funds show particularly high yields right now, but suggests that investors keep an eye on distribution coverage ratios -- which look at whether a fund's earnings can cover its payouts -- to identify issues where distribution cuts are more likely in the future.

Mike Taggart, founder of Taggart Fund Intelligence, joins the NAVigator to discuss current trends in closed-end fund mergers, and while he says that most deals benefit shareholders and management alike, he raises concerns about those times when consolidations and investment-mandate changes aren't great for a fund's owners. Taggart cites two affiliated funds that have been going through transitions...

Portfolio manager Brian Kessens of Tortoise Ecofin, who oversees the closed-end Tortoise Pipeline and Energy, and the Tortoise Power and Energy Infrastructure Fund, says he expects double-digit total returns from midstream and other energy companies based on current high yields, supported by stock buybacks and debt paydowns. The energy sector had a rocky time through 2020 and has rebounded sharply...

Nicholas Marshi, editor of the BDC Reporter says that business development companies are heading into 'a bit of a golden age' over the few years as a result of low interest rates continuing to help with the cost of capital, improved credit conditions generally, and thanks to mergers that have swallowed up some of the weaker players in the field. It all combines to make Marshi's take on the BDC sec...

Jerry Paul, senior vice president of fixed income for ICON Advisors -- manager of the ICON Flexible Bond Fund -- says that fears of rising interest rates and inflation haven't made reasonable yields on closed-end investments dry up. Paul continues to look at closed-end activism situations, which has brought him to bank-loan funds; he worries about decreased investor activism but thinks they will a...