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Coronavirus Roundtable - The Closed-End Funds Opportunity Persists

Jun. 01, 2020 7:00 AM ETSaba Closed-End Funds ETF (CEFS)ADX, DMO, EHI, FCT, IOFIX, JLS, PDI, RQI, THW, FIV, JPT11 Comments
SA Investing Groups profile picture
SA Investing Groups


  • We gather a panel of authors to discuss closed-end funds and their set-up heading into June.
  • While distributions have been cut in some places, other areas have held up nicely.
  • Combined with still wider discounts to NAVs, nimble investors may find opportunities.

Markets have settled and recovered from the initial shock of the coronavirus spread and the response of governments around the US and the world to lock down the economy. But while the major US indices have approached, if not quite matched, the fabled v-shaped recovery, there are still plenty of questions left for investors.

The disconnect between the markets and the economy has become a cliche, which doesn't change its validity. The size of stimulus in the US has been unprecedented. As governments start to reopen, it's to be seen whether we will see a second wave of cases. And we don't yet know how quickly people will go back to spending, and what the engine of the economy will be in this uncertain period.

To suss out all these uncertainties, we're doing a second round of our coronavirus roundtable series. We'll be looking at some of the major sectors of the market that are in the market, overall market and macro outlooks, and niches that may deserve investors' attention.

Today, on reader request but also given it's a lesser followed part of the market, we're covering Closed-End Funds, or CEFs. Attractive for income or as a way to get a discount on highly liquid assets, they are also a different way to add diversification to one's portfolio. As they're less known, we've asked a panel of Marketplace authors who follows them closely to shed light on the topic. Our panel:

How have closed end funds held up in the current environment, and are you surprised by the volatility in the sector or has it played out as expected?

ADS Analytics: The performance of CEFs

This article was written by

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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

ADS Analytics is long JPT, FIV, and NID Alpha Gen Capital is long PCI, EHI, DMO, JLS, and FCT. Blue Harbinger is long ADX.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given that any particular security, portfolio, transaction or investment strategy is suitable for any specific person. The author is not advising you personally concerning the nature, potential, value or suitability of any particular security or other matter. You alone are solely responsible for determining whether any investment, security or strategy, or any product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. The author is an employee of Seeking Alpha. Any views or opinions expressed herein may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.

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Comments (11)

22 Jun. 2020
Looks like they have won the activist battle today?
Alpha Gen Capital profile picture
Yes. Played out nicely.
lakochin profile picture
Why no mention of expenses?
I was long DMO but exited my position after yet another distribution cut.. Like 3 in a year....
Alpha Gen Capital profile picture
That is because they went from a term trust to perpetual trust fund. So now they are moving the distribution to be in line with net investment income. This looks to be the last cut.
Saba Capital has taken a stake in Brookfield Real Asset CEF RA. Is this a sign of Saba looking to close the discount of this fund ?
Alpha Gen Capital profile picture
RA is a big fund. I would guess this is more of them thinking the fund is cheap.
sacking profile picture
Good questions. Insightful responses. Thank you for posting. And for the authors participating, Thank you for your insights.
galicianova profile picture
Thank you gentlemen for the trialog
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