The NAVigator

Christian Munafo, chief investment officer, in Liberty Street Advisors, which runs the Private Shares Fund, says there are two stories dominating the private equity markets, with high-performing well-financed private innovation companies being proverbial unicorns compared to less- differentiated, less-capitalized companies which are more prone than ever to failure due to conditions in the capital...

Host Chuck Jaffe attended this week's Morningstar Investment Conference in Chicago and took the podcast with him, catching up with 'Super Mario' -- investment legend Mario Gabelli, founder of the Gabelli Funds , a long-tenured fan of closed-end funds, who discusses the pros and cons of the closed-end structure, especially as it relates to the Gabelli Equity Trust and the 10 percent payout he has m...

Roxanna Islam, associate director of research at VettaFi , says that exchange-traded funds that invest in closed-end funds give investors diversified portfolios -- and all the benefits of investing deeply in the closed-end space -- in a one-stop shopping wrapper. Islam says that investors worry about high fees in ETFs of closed-end funds, noting that CEFs tend to have higher expense ratios on thei...

Jonathan Mondillo, head of North American fixed income for  abrdn says that 2023 has been a year of wild moves in the municipal bond market, performing well in January before selling off in one of the worst months of February ever, setting up a March rebound until the banking crisis hit. Most of those movements have been driven by macro headlines, and Mondillo says that investors want to drill dow...

John Cole Scott, president of Closed-End Fund Advisors , discusses how and why investors might pursue private equity and debt using closed-end funds, noting that expansion of the industry and changes in structure adding share classes have made private, alternative investments much more accessible for investors. Scott -- who also is chairman of the Active Investment Company Alliance -- He says the...

Cheryl Pate, senior portfolio manager at Angel Oak Capital -- co-manager of the  Angel Oak Financial Strategies Income Term Trust -- says that current problems in the banking sector are setting up a recovery, noting that 'opportunities like this are fairly rare, probably a once-in-a-decade opportunity for the banking space,' with the biggest opportunities being on the debt side as spreads start to...

Steve O'Neill, portfolio manager at RiverNorth , says the average municipal-bond closed-end fund has a discount of 10.5 percent, which over the last 25 years would be in 'the 99th percentile of cheapness.' While O'Neill makes the case for buying muni bonds, he says the case for closed-end funds is largely because of the discounts being oversized, noting that the rest of the fixed-income market has...

Bryce Doty, senior portfolio manager at Sit Investment Associates says that the problem at the heart of the current banking crisis is not a default problem, but rather is a logical outcome from how quickly the Federal Reserve raised interest rates. He expects it to keep impacting the value of fixed-income securities until things stabilize; that, in turn, will create more opportunities for closed-e...

John Cole Scott, president of Closed-End Fund Advisors says that -- despite a rough outing for business development companies this week -- BDCs have had a strong quarter from a total return perspective, and that prospects remain strong as BDCs have been raising their distributions but the dividend-coverage percentages have remained roughly steady, a sign that they're not only positioned well now b...

Jay Rhame, chief executive officer at Reaves Asset Management -- president of the Reaves Utility Income Fund -- says that the dividend-growth potential for utility companies makes them a viable investment option in today's high interest-rate  high inflation market. While those conditions typically are not ideal for utilities, Rhame says utility stocks are reasonably valued; he also discusses infra...

Steven Perry, vice president at XA Investments -- where he oversees product management on the XAI Octagon Floating Rate and Alternative Income Trust, -- discusses the benefits and risks associated with leverage in closed-end funds during a rising-rate environment, noting that for the closed-end fund market at the end of 2022, the levered market yield on net asset value was about 7.8 percent, compa...

Will Rhind, chief executive officer at GraniteShares -- which runs the GraniteShares US High Income ETF -- says that it appears to him that inflation has peaked and that interest rates are more stable, which has created a more favorable outlook for business-development companies and closed-end funds. Rhind notes that with economic conditions improving, the prospects for the businesses that are fun...

Michael Beth, director of trading at WallachBeth Capital , says that for all of the growth in the closed-end fund space, the amount of trading done each day is relatively small compared to other investment vehicles,  which creates challenges for investors to get efficient execution on trades. Beth notes that conditions can make it so that an investor trying to buy a fund at a 10 percent discount c...

John Cole Scott, president of Closed-End Fund Advisors and the chairman of the Active Investment Company Alliance, returns to The NAVigator to discuss how closed-end funds responded to the year-end rally and then the sharply bullish January, examining which sectors and fund types came out ahead and where the opportunities appear to lie now. He's got details -- and fund picks -- across various sect...

Eric Purington, portfolio manager and infrastructure specialist at abrdn, says that middle-market private investments are a path to profitability and outperformance now due to a supply-demand imbalance that has large-cap operators -- working with an 'ocean of capital' looking to do more acquisitions and pay a premium for them. Purington, who is responsible for private-market investments for the ab...

Nate Jones, head of fund finance and Treasury at Nuveen, says that conditions and 'market nuances' from late in 2022 have carried into the new year, noting that the yield curve for municipal bonds is sloping upward even more than the plot on taxable bonds, which is creating opportunities for investors to benefit from using leverage to make closed-end muni returns attractive now. Jones also explain...

Axel Merk, chief investment officer of the ASA Gold and Precious Metals fund, says that the market is pricing in a recession and the start of rate cuts down the road, and the gold market is already reacting because it tends to lead in these cycles. Merk makes the case for owning both precious metals and the mining companies now, though he notes their different risk profile and uses; he points out...

Cheryl Pate, senior portfolio manager for Angel Oak Capital -- manager of the Angel Oak Financial Strategies Income Term Trust -- says that it's late in the cycle for rate hikes, mid-cycle for banks in terms of margin expansion and early in the cycle for credit, and she noted that the financial services sector typically goes through a profit-margin expansion that's a 'lagged benefit' that should s...

John Cole Scott, chief investment officer at Closed-End Fund Advisors -- the chairman of the Active Investment Company Alliance -- says that investors looking for the top sector bets in the new year will want to look at some of 2022's weakest areas, most notably real estate investment trusts 'REITs' and real assets. He also expects international bonds and more to be in the sweet spot. Scott gave h...

John Cole Scott, chief investment officer at Closed-End Fund Advisors -- the chairman of the Active Investment Company Alliance -- takes a look back at the challenging times experienced by the closed-end fund industry this year, noting that all the news wasn't bad despite slower-than-expected growth for the industry and bigger-than-anticipated losses on the market. His basket of five funds for 202...

Stacey Morris, head of energy research at VettaFi -- part of the team involved in the Alerian Energy Infrastructure Index suite -- says that energy markets are likely to remain tight and keep dealing with inflation in 2023, both of which can be tailwinds to energy companies and especially midstream companies, but she notes that the midstream/pipeline companies have cash-flow stability that makes t...

Steve O'Neill, who co-manages the closed-end fund trading strategies and oversees the closed-end fund analysts at RiverNorth, says the timing is right for closed-end fund investors looking for big discounts that will likely be shrinking right after the turn of the year as the tax harvesting process plays out. O'Neill discusses how the big discounts amount to extra gravy for investors hungry for be...

Chris Oberbeck, chairman and chief executive officer at Saratoga Investment Corp. -- one of the industry's largest publicly traded business-development companies -- says that BDCs have been a relative sweet spot during this year's troubled times largely because they benefited from being on the front end of rate hikes and turning them quickly into cash on the bottom line. While the companies must a...

With holiday shopping bargains on everyone's mind, John Cole Scott, chief investment officer at Closed-End Fund Advisors -- the chairman of the Active Investment Company Alliance -- sorts through the big discounts in the closed-end fund world to come up with the best bargains, the most meaningful plays now, based not just on current sale prices but the value and income streams investors can unlock...

Michael Grayson, portfolio manager for First Trust Capital Management -- where he oversees their Alternative Opportunities, Private Credit and Real Assets funds --  says that investors should be sacrificing some liquidity for the flexibility to get different assets into their portfolios and to have investments that capture most of the upside in bull-market times while protecting capital during mar...