CEF Insights: Liberty All-Star's Multi-Manager Equity Strategies For Income

Core Insights - The Liberty All-Star Funds utilize a multi-manager approach to enhance performance consistency and leverage the unique strengths of each manager [2][3][6] - The All-Star Growth Fund (ASG) focuses on an all-cap growth portfolio, while the All-Star Equity Fund (USA) emphasizes large-cap investments, blending growth and value strategies [3][6] - The funds have specific distribution policies, with USA targeting a 10% annual distribution and ASG aiming for 8% annually, supported by their multi-manager structure [5][6] Fund Structure and Strategy - The multi-manager approach is designed to blend different investment styles, which helps in navigating various market cycles and supports the overall investment philosophy [3][4] - The selection process for portfolio managers is based on the "five Ps": people, process, philosophy, parent organization, and performance, ensuring a complementary fit among managers [4][5] - The funds have experienced a total of 10 manager changes for ASG since 1995 and 19 for USA since 1986, indicating a careful and systematic approach to manager evaluation and replacement [5] Current Portfolio Positioning - ASG is currently overweight in financials and healthcare while underweight in technology, reflecting a strategic allocation based on market conditions [6] - USA is also overweight in financials and underweight in technology, with a diversified portfolio that differs from the S&P 500, showcasing a lower capitalization [6][7] Investor Considerations - The closed-end fund structure of USA and ASG offers equity-like returns along with a steady income stream, making them suitable for investors seeking both growth and income [6][7] - The unique multi-manager structure is highlighted as a competitive advantage, particularly for retirement portfolios, as it provides liquidity, transparency, and growth potential [6][7] - Consistency in performance is emphasized as crucial for supporting distribution policies and enhancing investor satisfaction, particularly in light of behavioral tendencies among retail investors [7]