Market Overview - CEF performance varied, with equity-linked sectors declining while longer-duration, higher-quality sectors like Munis outperformed due to a sharp fall in 10-year Treasury yields, boosting Muni prices [2] - July ended positively with nearly a 3% gain across the CEF space before an early August market hiccup [2] Market Themes - NYSE proposed an amendment to eliminate the requirement for CEFs to hold annual shareholder meetings, which could impact shareholder voting on fund board members [3] - The NYSE argues that existing protections for CEF shareholders under the 1940 Investment Company Act would remain intact, despite concerns about reduced competition and oversight [3] - Saba is actively campaigning against the proposed rule change, emphasizing the importance of regular elections for maintaining competitive pressure on CEFs [3] Fund Performance - Saba's CEFs reported that approximately 39% of distributions for the fiscal year-to-date came from net investment income, with BRW showing net investment income around 5.5% and SABA at 3.3% [4][5] - The relative value analysis indicated that SABA was previously a more attractive option when its discount was about 5% wider than BRW, but this opportunity has since diminished [5] IPO Activity - Bill Ackman withdrew the IPO for Pershing Square USA after significantly downsizing the deal, indicating a lack of interest that hindered the transaction [6] - Ackman's previous assertions about the fund trading at a premium were contradicted by market realities, as only 16% of listed CEFs trade at premiums [6][7] Investment Opportunities - Muni CEFs have shown strong performance amid market drawdowns, attributed to lower long-term rates and high-quality profiles, providing a margin of safety [8] - Specific funds such as conditional tender offer funds (MVF) and (EIM), as well as higher-yielding options like NZF, are highlighted as attractive investment opportunities [8]

Core Insights - The article discusses the investment strategy of the MainStay CBRE Global Infrastructure Megatrends Fund (MEGI), which focuses on three megatrend themes: decarbonization, asset modernization, and digital transformation [3][4] - MEGI aims to deliver high total returns with an emphasis on current income, differentiating itself from peers through its thematic orientation [3][4] Investment Themes - Decarbonization constitutes approximately 50% of the portfolio, focusing on global utilities and contracted power businesses [4] - Asset modernization accounts for 35% of the portfolio, investing in toll roads, airports, and midstream energy assets [4] - Digital transformation makes up about 15% of the portfolio, with investments in cell towers and data centers [4] Distribution Policy - MEGI pays monthly distributions of $0.125 per share, annualized to $1.50, utilizing a managed distribution policy that includes realized capital gains [5] - The fund increased its distribution by 15% in July of the previous year, reflecting consistent earnings and income growth [5] Market Outlook - The listed infrastructure market is believed to have bottomed in October 2023, with a constructive outlook for the asset class [6] - Earnings for infrastructure companies are expected to grow by 8% next year, surpassing the long-term average of 6% [6] Energy Demand Trends - A significant increase in global energy demand is anticipated, with U.S. electricity demand projected to rise by 188% by 2030 [6] - Data centers are expected to grow from 2.5% to 7% of overall electricity demand in the U.S. by 2030, driven by generative AI and electrification [6] Portfolio Positioning - MEGI's portfolio consists of 64 positions, with 88% in common equity and 12% in preferred shares, recently shifting towards more common equity for greater upside potential [7] - Geographically, 51% of the portfolio is in the Americas, 31% in Europe, and 18% in Asia Pacific [7] Strategic Fit in Portfolios - MEGI is positioned as a strong complement to income-focused allocations and other real assets, increasingly funded from broad equity exposures due to attractive valuations [8]

Jacobs Stock Photography Ltd Welcome to another installment of our CEF Market Weekly Review, where we discuss closed-end fund ("CEF") market activity from both the bottom-up - highlighting individual fund news and events - as well as the top-down - providing an overview of the broader market. We also try to provide some historical context as well as the relevant themes that look to be driving markets or that investors ought to be mindful of. This update covers the period through the fourth week of July. Be ...

Systematic Income On a weekly basis, it was less unusual. TOTAL CEF WEEKLY VOLUME (Ms shares) 1000 800 600 400 200 7016 2018 7020 2022 702A date Systematic Income MUNICIPAL CEF SECTOR NAV TREND 100 l 8 ද 90 85 80 75 2022.01 2022-11 Q date Systematic Income CEFs which are particularly susceptible to forced deleveraging are those with leverage limits (above and beyond the regulatory ones) as well as those with very high-beta such as MLPs, CLO Equity funds and others. that the NAVs significantly lag the bounce ...

Core Insights - The income market has seen significant price increases, with only local emerging market debt showing negative returns year-to-date [2] - A countercyclical value-based approach has led to the reduction of risk exposure in income portfolios, resulting in the exit from high-performing assets like Gladstone Capital [4] - The closed-end fund (CEF) sector presents opportunities for attractive yields without chasing overpriced assets, with specific funds highlighted for their potential [8] Group 1: Market Performance - The income assets and broader financial market have experienced substantial growth, with a year-to-date return of 20% in some sectors [2] - Local emerging market debt is the only sector in the red year-to-date, indicating a divergence in performance across income sectors [2] Group 2: Investment Strategy - The company has adopted a countercyclical value-based allocation strategy, reducing risk exposure when compensation for risk is low [4] - Exited positions include Gladstone Capital, which was trading at a nearly 30% premium to NAV, indicating it is fully priced [4] - The Nuveen Preferred and Income Term Fund was also exited due to limited room for further outperformance as its discount approaches zero [5] Group 3: CEF Sector Insights - The Flaherty suite of CEFs is recommended for investors seeking exposure to preferreds, with the Flaherty & Crumrine Preferred Income Opportunity Fund trading at a 12% discount and a 6.7% yield [8] - The limited duration CEF sector has diverged from the loan CEF sector, presenting inefficiencies that could be exploited [7] - The PGIM Short Duration High Yield Opportunities Fund is noted for its double-digit discount and decent entry point, with a nearly 60% allocation rated BB and above [10] Group 4: Specific Fund Recommendations - Bain Capital Specialty Finance is highlighted for its 6% discount and 10.8% yield, with a favorable NAV profile despite past dilution [12] - The Nuveen Municipal Credit Fund is attractive due to its high-quality profile, wide discounts, and potential for tighter discounts as leverage costs fall [14] - Blue Owl Capital Corporation III is noted for its high-quality portfolio and a 10.9% dividend yield, trading at a 4% discount [16]

Core Insights - The Bexil Investment Trust has achieved a total return of 93.90% over the past ten years, which is significantly lower than the S&P 500 Index's return of 183.86% but better than its price performance alone [3][22] - The fund currently offers a yield of 7.70%, which is attractive compared to the S&P 500 Index's yield of 1.30%, but it ranks in the bottom half among its peers [3][19] - The fund's unique portfolio consists primarily of common stocks, with a focus on basic materials and financial firms, differing from the technology-heavy holdings of many other funds [12][20] Fund Performance - The Bexil Investment Trust's share price has declined by 19.82% over the past decade, indicating underperformance relative to most of its peers [8][9] - Despite the share price decline, the fund has managed to cover its distributions through net realized gains and net investment income, reporting a total investment income of $5,585,129 against distributions of $12,788,431 for the year ending December 31, 2023 [17][18] - The fund's net asset value has increased by 7.94% since the last financial report, suggesting it is currently covering its distributions effectively [18] Portfolio Composition - The fund's portfolio is heavily weighted towards common stocks (108.34%), with minimal allocations to corporate bonds (0.04%), master limited partnerships (0.44%), and preferred stocks (1.25%) [11] - The largest holdings include companies from diverse sectors such as steel production, banking, and retail, which may provide diversification benefits compared to more common technology-focused funds [12][13] - Some of the fund's largest positions do not pay dividends, which could limit income generation, but others, like U.S. Bancorp, offer reasonable yields [27][28] Leverage and Valuation - The Bexil Investment Trust employs a low leverage ratio of 10.00%, which is below the preferred maximum of one-third of assets, indicating a conservative approach to leveraging [15][29] - Shares are currently trading at a 36.26% discount to net asset value, which is consistent with the average discount over the past year and suggests an attractive valuation [19][20]

Fixed-income CEF sector discounts are now firmly on the expensive side, in aggregate, while equity CEF sector discounts are still somewhat cheap. MEDIAN SECTOR DISCOUNTS 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% -12.0% -14.0% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Systematic Income Anticipated Tender Offer Dates for the Funds While BlackRock's nominees for BIGZ have the following, lower, vote tallies. Systematic Income CEF Tool Market Action Systematic Income BlackRock's message was that Saba's pr ...

getty Gabelli Dividend & Income Trust (GDV) Notice that many of these stocks don't come close to meeting our yield requirements. But GDV comes a lot closer, delivering a nearly 6% yield currently—and it pays us monthly, too! MainStay CBRE Global Infrastructure Megatrends Term Fund (MEGI) Another term fund with a wildly different aim is the BlackRock Health Sciences Trust II (BMEZ). Unlike some of the other CEFs mentioned here, BMEZ's sky-high yield doesn't come from leverage—it comes from the fund's ability ...

Core Viewpoint - The closed-end fund (CEF) market is experiencing mixed performance, with discounts generally widening, but most sectors showing positive returns month-to-date, particularly municipal funds due to a significant drop in long-term Treasury yields [15]. Market Action - Fixed-income sector discounts are trading tighter than equity counterparts, indicating a shift in investor preference towards fixed-income assets [4]. - The credit CEF swirlogram suggests that valuations are inching towards the unattractive quadrant, with tight underlying credit spreads and increasing discounts [7]. - The funds have seen a bounce of 4-5% as discounts tightened, with historical data showing that certain funds traded at significant discounts which have mostly disappeared at the start of 2024 [8]. Sector Discounts - Loan CEFs are trading at very tight discounts, while municipal CEF discounts have tightened slightly but remain near double-digit levels on average [18]. - Limited duration CEF discounts have also tightened slightly, indicating a disconnect from loan CEFs, which have historically moved in sync [18]. Investment Vehicles - Investors interested in Saba's activism have three investment vehicles available: the SABA CEF ETF (CEFS) and two CEFs (BRW and SABA) [10]. - The SABA CEF ETF is characterized as a more pure-play activist CEF portfolio, while the two CEFs resemble traditional fixed-income/multi-sector funds [12]. Recent Developments - Saba and Invesco have entered into a standstill agreement regarding two state municipal CEFs (VPV and VTN), with Invesco planning a tender offer for 25% of the funds' common shares at 99% of NAV, set to go live at the end of October [21]. - Following the tender offer, it will be observed whether Saba will increase its share purchases if discounts widen again [22].

Market Action - CEF discounts have tightened and are now close to their long-term average levels [3] - Blackstone increased the distribution of their loan CEF BGB by 9% to $0.101, showing significant variability in its distribution history [5][6] - CLO CEFs experienced a positive month in May, with all fund NAVs rising and several funds trading at double-digit premiums [6] Market Themes - A number of managers are actively working to tighten discounts, contributing to the strength of discounts in the market [8] - The CEF market showed mixed performance, with Muni sectors outperforming due to a decline in Treasury yields following soft inflation data [11] Market Commentary - Proxy advisers are involved in the ongoing Saba and BlackRock conflict, with ISS supporting Saba's efforts to change board members while also recommending BlackRock nominees for other funds [12] - Glass Lewis recommended reelecting all of BlackRock's board nominees, stating that Saba has not made a compelling case for its proposed changes [12] - The competition between Saba and BlackRock is seen as beneficial for the CEF market, prompting BlackRock to implement shareholder-friendly actions [12]