Calamos Global Dynamic Income Fund: An Income-Equity Closed-End Fund

| About: Calamos Global (CHW)

Calamos Global Dynamic Income Fund is a closed-end fund traded on the New York Stock Exchange under the symbol CHW. It is part of a group of closed end funds managed by Calamos Investments. The other closed-end funds are Calamos Convertible Opportunities and Income Fund (NASDAQ:CHI), Calamos Convertible and High Income (NASDAQ:CHY), Calamos Global Total Return (NASDAQ:CGO) and Calamos Strategic Total Income Fund (NYSE:CSG). CHW commenced operations on June 27, 2007. Calamos had launched its first mutual fund in 1985 and its first closed end fund in 2002.

As of October 31, 2011, CHW had gross assets of $732,475,940, of which 37% were borrowed funds of $197,741,191 leaving net assets of $ 534,734,749. As of December 30, 2011, the fund sold at a discount from net asset value of 16.78%. The discount fully reflects its prior performance. Since inception on 6/27/07 its market price had declined by 5.03% even if in the last year it increased by .72%.

CHW has a managed distribution program which last year paid out 7.77% of market price as of October 31, 2011, even if it actually had net income of 3.11% on net asset value. Calamos believes in paying out steady returns, whether or not there is sufficient income. I personally do not agree with that approach but it is popular with older investors on fixed income.

Sector weightings are as follows:

Information Technology 20.4%
Energy 16.4%
Health Care 11.9%
Industrials 10.8%
Consumer Staples 9.0%
Materials 8.1%
Consumer Discretionary 7.6%
Financials 7.3%
Telecommunication Services 4.5%
Utilities 1.4%

Asset allocation is dynamic and changes with investment opinion. It can fluctuate between bonds, convertibles and common stock. As of October 31, 2011, the asset allocation was as follows:

Common Stock 60.6%
Corporate Bonds 19.3%
Convertible Bonds 14.3%
Convertible Preferreds 3.4%
Other 2.4%

The fund's bond portfolio is primarily in higher yielding bonds. The fund has 1.5% of its assets in common stock short positions, 1.1% in money market and 3.4% in structured equity linked securities.

The fund does have currency exposure, with its largest exposure as follows:

U.S. Dollar 58.7%
European Monetary Unit 11.7%
British Pound Sterling 8.2%
Swiss Franc 5.5%
Japanese Yen 3.8%
Canadian Dollar 3.0%

CHW has not done well and has very substantial tax losses, which as of October 31, 2011, were as follows:

Undistributed net investment income ($1,851,489)
Net realized losses ($126,200,289)
Unrealized losses ($111,804,668)

For the year ending October 31, 2011, per share statistics were as follows:

Return on net assets 5.64%
Return on share price 0.72%
Gross expenses 1.93%
Expenses not including interest costs 1.45%
Net investment income 3.11%
Portfolio turnover 43%


Although they have not done well in the past, CHW has much appeal to me, for the following reasons:

  1. It is managed by Calamos which does have considerable expertise in convertible and higher yielding debt
  2. I do prefer a structure, which allows a fund to use leverage, short sales and swaps when appropriate
  3. Although the decisions have not been particularly appropriate, it is important to have a dynamic structure that can switch among asset classes
  4. The fund has accumulated substantial tax benefits which can be reaped if the right investment decisions are made, and
  5. The present portfolio seems very appropriate for market conditions and has a good chance of showing substantial improvement.

The fund should only be purchased when the discount is above 15% as it is at present. They have not done well and the discount offers some insurance protection, if they continue to struggle.

As always, I would not invest all my money in CHW, but I would most definitely include it in a basket of other deeply discounted closed-end funds.

Disclosure: I am long CHW.

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