The NAVigator

Miguel Laranjeiro, Investment Director at abrdn, says we are seeing "the beginning of a robust in-flow cycle into the muni space," noting that credit spreads and all-in yields are attractive and that the value of the tax exemption will particularly pay off now. He says he expects the Federal Reserve's long-awaited rate cuts will end the longest yield curve inversion ever for municipal bonds. Once...

Mitchel Penn, Managing Director of Equity Research at Oppenheimer and Co., says that while business development companies (BDCs) have struggled this year, they are positioned well to ride out the changing interest rate cycle. He says that when the Federal Reserve starts cutting interest rates, he expects BDCs to see higher fee income, though some of that could be offset by a higher level of defaul...

John Cole Scott, President of Closed-End Fund Advisors and Chairman of the Active Investment Company Alliance, discusses how investors in funds trading at premiums can use sector swapping to turbocharge their gains. He describes a process where an investor sells out of funds trading at premiums and purchases similar funds trading at discounts, locking in profits and expanding the buying power of t...

John Cole Scott, president of Closed-End Fund Advisors and Chairman of the Active Investment Company Alliance, explains how closed-end funds have responded historically to corporate actions like tender offers, liquidations, transitions to open-end funds, rights offerings, and big changes in dividend policy. He notes that understanding how those events play out gives investors a guideline on what t...

Maury Fertig, Chief Investment Officer at Relative Value Partners, discusses how the changing interest rate picture is impacting considerations on the closed-end funds he is considering for client portfolios  —  and which areas of the closed-end fund universe look particularly attractive now. He also talks about how a number of BlackRock funds are performing in the wake of a recent tender offer.

Chris Oberbeck , Chairman and Chief Executive Officer at Saratoga Investment Corp. , says that private credit  — which has been on the rise for several years — is being challenged by a cooling market for mergers and acquisition activity. That has put pricing pressure on managers, which should ease a bit as rates come down and mergers and financing deals become easier to do.

Aaron Filbeck, Managing Director of the Chartered Alternative Investment Analyst Association (CAIA), discusses interval funds, their evolution, fee structures, and potential. He also responds to recent media coverage that has been critical of them as investment vehicles, including a recent Wall Street Journal article on how interval fund fees "will leave you high and dry."

Kimberly Flynn, Managing Director of Alternative Investments at XA Investments , discusses the state of interval funds, which have been growing rapidly and expanding their asset reach. It's not just the 50-plus funds on file and the entry of big players and new investment ideas, but also the recent rise in media interest. In the interview, Flynn responds to a recent Wall Street Journal article cri...

Duncan Farley, Portfolio Manager on the Developed Markets Special Situations team at RBC BlueBay Asset Management  — manager of the BlueBay Destra International Event-Driven Credit Fund — says corporations that have been "dining out on cheap finance" now have indigestion because their debt levels, leverage, and costs have gone up, so "the math doesn't work." As a result, he's expecting trouble for...

John Cole Scott, President of  Closed-End Fund Advisors  and Chairman of the Active Investment Company Alliance, provides an update on what's been happening with closed-end funds throughout the first half of 2024. He notes that discounts narrowed almost across the board, but yields increased, resulting in positive returns for most asset classes.

Jason Akus, Senior Investment Director and Head of Healthcare Investing at abrdn and manager of the firm's four closed-end funds covering biotech and healthcare , says that the stock market appears to be broadening out and that healthcare and biotech are both likely to be beneficiaries. Healthcare stocks have generally lagged the stock market since the start of 2023, but with the Standard & Poor's...

Mark Gatto, Co-Founder and Co-Chief Executive Officer of CION Investment Group — which manages the business development company CION Investment Corp. — discusses the heavy interest and cash flow into BDCs and how that is changing the space and making it important for investors and advisers to "pull back the layers to understand what they are investing in." Gatto advises paying particular attention...

John Cole Scott, President of Closed-End Fund Advisors and Chairman of the Active Investment Company Alliance, compares two high-yielding offerings from Ares, breaking down the Ares Dynamic Credit Allocation (ARDC) fund and the CION Ares Diversified Credit I (CADUX) fund. He shows that while both could be viable and attractive options for investors diversifying a portfolio into the alternative cre...

John Cole Scott, President of  Closed-End Fund Advisors  and Chairman of the  Active Investment Company Alliance,  shares takeaways from a recent industry conference focused on business development companies (BDCs). He talks about how BDCs compare to private credit funds, how the market is changing, and how some money managers are using artificial intelligence to get better information on market t...

Roxanna Islam, Head of Sector and Industry Research at VettaFi, discusses the benefits and flaws of applying rules-based investing to closed-end funds. She notes that changes in the industry have forced changes on a rules-guided index of closed-end funds created by VettaFi, and how that is impacting the holdings and asset allocation of the fund-of-funds that some investors are using instead of bui...

Rob Shaker, Portfolio Manager at Shaker Financial Services, says that economic conditions — the debt-ceiling debate, troubled banks, higher interest rates and persistent inflation — have created a situation where the market isn't climbing the proverbial wall of worry, but rather a 'Wall of Meh.' However, he adds that there is opportunity in the unimpressive current conditions, noting that long-ter...

Dave Lamb, Head of Closed-End Funds at  Nuveen , says there is a "much more aggressive form of activism today than what we saw years ago," and notes that it's driven entirely by discount-arbitrage opportunities rather than whether a fund is underperforming due to management decision-making. With discounts at wide levels — particularly for fixed-income funds — sponsors like Nuveen are taking more s...

John Cole Scott, President of Closed-End Fund Advisors and Chairman of the Active Investment Company Alliance, talks about the good and bad in recent industry developments. For example, Scott discusses how fund sponsors are taking steps to keep a lid on discounts, potentially reducing a fund's attractiveness to activist investors. He also highlights the trend towards managed payouts and how invest...

Stephen Minar, Managing Director and Head of Closed-End Funds at BlackRock, discusses a contemporary conundrum in the closed-end fund industry: How discounts drive money flows into closed-end funds but also attract activist investors whose actions may be harmful to long-term individual investors. To address this, Minar notes that BlackRock has launched initiatives in a series of new funds that can...

Charles Lewis Sizemore, chief investment officer at  Sizemore Capital Management , says that while short-term rates are as high as they are likely to be, the "massive discount" created in closed-end funds while rates were on the rise have not dissipated. That means closed-end funds remain a compelling value now, and Sizemore said he is finding particularly strong values in REIT-oriented funds and...

Clayton Triick, Head of Portfolio Management, Public Strategies at Angel Oak Capital Advisors — part of the team running the Angel Oak Strategic Credit Fund — says that fundamentals and valuations seldom get aligned the way they have right now for the U.S. housing market and American homeowners. He notes that valuations are "cheaper than they should be" given the strength of the market and mortgag...

Christian Munafo, Chief Investment Officer at  Liberty Street Advisors ,   which runs the  Private Shares Fund ,   discusses how late-stage private venture companies are generating a huge chunk of economic power off most investors ' radar . He says now is the time for many investors to pursue the opportunity, coming off of two years in which private shares struggled and markets for taking those co...

Jonathan Mondillo, head of North American fixed income for abrdn says that record discount levels for municipal bond closed-end funds, coupled with attractive yields on those funds, are creating real opportunities for investors, though he warns about the middle of the yield curve, noting that the most compelling values are at the two ends of the barbell -- the short-term and long-duration paper --...

John Cole Scott, President of Closed-End Fund Advisors and Chairman of the Active Investment Company Alliance, drills into the first-quarter data for closed-end funds.   He notes that while  municipal-bond funds still couldn't break out of their long-running slump,  the first three months were a strong time for most closed-end funds (more than 90 percent were up for the period).  

Bryce Doty, Senior Portfolio Manager at Sit Investment Associates , says the uptick in inflation is not enough to overwhelm the yields investors are earning, noting that real returns may be better than ever. He says investors should enjoy collecting the high yields while interest rates remain high, and while total returns should improve once cuts start, investors will have to wait for that to happ...