The NAVigator
268 episodes - English - Latest episode: 16 days ago - ★★★★★ - 5 ratingsThe NAVigator, from the Active Investment Company Alliance (AICA), talks all-weather investing and “excellence beyond indexing” through the use of closed-end funds (CEFs) & business-development companies (BDCs). AICA – a new organization that includes a diverse constituency that runs from investors through fund sponsors – aims to help investors & advisors plot a new and different course to financial success, via the tactical use of securities that mix active management within listed & non-listed structures. Subscribe now to get regular updates on everything you need to know to succeed with CEFs & BDCs.
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Episodes
Protections in Delaware law could change activist investing
August 26, 2022 14:09 - 11 minutes - 11.4 MBKenneth Burdon, an attorney in the investment management group at Skadden, Arps, Slate, Meagher & Flom, says the new "control share" statute enacted at the start of August by the state of Delaware should protect should protect investors from activist investors acting like corporate raiders trying to force a pop to net asset value without regard to what the broad group of shareholders is interested in. The law forces further negotiation between the board and outsiders, Burdon says, giving dir...
VettaFi's Islam talks the benefits of an index of closed-end funds
August 19, 2022 13:43 - 10 minutes - 9.7 MBRoxanna Islam, associate director of research at VettaFi -- which developed the the S-Network Composite Closed-End Fund Index and other benchmarks for the closed-end fund space -- discusses the construction of indexes of closed-end funds and the benefits to using them over individual issues, as well as how passive investing in the space has held up against active management during the rough start to the year.
Sit's Doty sees current market creating a sweet spot for CEFs
August 12, 2022 15:11 - 11 minutes - 11.3 MBBryce Doty, senior portfolio manager at Sit Investment Associates, says that the market's troubles this year have set closed-end funds up to be in a sweet spot, able to generate additional returns that traditional mutual funds and ETFs can't get investing in the same spaces. Despite those potential benefits, Doty acknowledges that most investors shy away from closed-end funds for a lack of understanding, and also miss out on the benefits of running closed-end funds as a portfolio or bucket o...
The difference between funds with discounts or premiums is more than pricing
August 05, 2022 14:34 - 10 minutes - 10.2 MBJohn Cole Scott, chief investment officer at Closed-End Fund Advisors and the chairman of the Active Investment Company Alliance, discusses some equity and fixed-income funds currently trading at premiums and compares them with similar funds priced at a discount, noting that expenses, payouts and more determine relative values. Further, he notes that when the market takes a dive and discounts widen, investors should consider whether the best bargain is the fund with the widest discount or th...
Nuveen's Ryan: Municipal bonds have stabilized and are poised to recover
July 29, 2022 15:37 - 11 minutes - 11.1 MBPortfolio manager Tim Ryan of Nuveen -- who runs the Nuveen Dynamic Municipal Opportunities closed-end fund -- says that after a miserable first half of 2022 that lagged Treasury bonds, conditions have stabilized for muni bonds, which now have a more attractive yield curve and offer a better investment opportunity than Treasuries. Ryan says that the first-half selloff was more about technicals than about the quality of the underlying municipal bonds, which means that when the interest-rate p...
Private equity zags in market where everything is moving (down) together
July 22, 2022 14:54 - 12 minutes - 12.2 MBTimothy Reick, chief executive officer at Liberty Street Advisors -- advisor to the Private Shares Fund -- says that private equity is an asset class that is not correlated to the broad stock market, and that individual investors largely overlook its potential role in their portfolios. Reick notes that with private companies waiting much longer both in terms of time in business and the asset size they grow to before turning to public markets -- if they ever go that route -- investors will fi...
John Cole Scott: Expect 'upside surprises' for BDCs during earnings season
July 15, 2022 13:49 - 11 minutes - 11.1 MBJohn Cole Scott, chief investment officer at Closed-End Fund Advisors and the chairman of the Active Investment Company Alliance, says that business-development companies -- which are built to handle a four-year business cycle -- are looking at positive surprises as second-quarter earnings season arrives. From July 26 to August 10 -- when the bulk of BDCs will report earnings -- Scott says that BDC discounts are currently about 13 percent wider than media discounts have been over the last tw...
Rob Shaker: 'Sympathy widening' could signal a bottom for discounts
July 08, 2022 13:41 - 11 minutes - 11.2 MBRob Shaker, portfolio manager at Shaker Financial Services, says that the closed-end fund market showed signs of a "sympathy widening" in mid-June, an event when there is "excessive liquidation selling based on fear," leading to a bad day on the stock markets and bond closed-end fund discounts widening at the same time. Shaker says it can be a sign of a market bottom, which can lead to a bounce-back; still, he says, markets remain fragile and there could be more excessive selling again, tho...
XA Investments' McCulloch sees more growth, new entrants to interval funds
July 01, 2022 13:25 - 11 minutes - 10.6 MBBen McCulloch, managing director and general counsel at XA Investments, says that the last five years have seen over $40 billion in growth in interval funds and tender-offer funds, and that interest has attracted more fund sponsors -- including companies that have been heretofore more focused on ETFs -- and more new ideas. That has brought with it increased regulatory scrutiny, as the Securities and Exchange Commission is evaluating what kinds of alternatives -- particularly with private-equ...
CEF Advisors' Scott: No time like the present for tax-loss sales
June 24, 2022 14:18 - 9 minutes - 9.58 MBJohn Cole Scott, chief investment officer at Closed-End Fund Advisors and the chairman of the Active Investment Company Alliance, returns to The NAVigator to answer questions frmo listeners, including one on whether it makes sense to do tax-loss selling now rather than waiting for the traditional period for making swaps at the end of the year. Scott recommends closed-end fund investors tap their "tax assets" when they are valuable, and losses in today's market can be turned into a benefit ea...
Nuveen's Holzenthaler: Surprise, it's 'a buyer's market' on senior loans
June 17, 2022 14:28 - 11 minutes - 11.2 MBLarry Holzenthaler, investment strategist and analyst for Nuveen, says that "floating rate loans actually look arguably cheap to us today," acknowledging that it's surprising that the asset class is trading at a discount "in the middle of one of the most brutal rate-hike campaigns we have ever seen." Holzenthaler -- who also covers the high-yield space -- says that senior loans have been one of the few places where investors have avoided much of the pain in the fixed-income markets, making ...
Pre-market SPACs offer unique opportunity, given current conditions
June 16, 2022 11:33 - 15 minutes - 14.3 MBIn this bonus episode of The NAvigator, Jonathan Browne, director of research at Robinson Capital and portfolio manager of the Robinson Funds talks about how balancing closed-end fund investments with pre-market SPACs [special-purpose acquisition companies] creates opportunities for higher yields with diversification that helps to balance out risks.
EIP's Brothwell: Energy market amid supply woes requires diversification
June 10, 2022 13:27 - 11 minutes - 11.4 MBSam Brothwell, director of research at Energy Income Partners, says that the current cycle of under-investment in capital spending has made it harder for energy producers to respond to the current global supply-demand imbalance; that has pushed energy prices -- for oil, natural gains, electricity and alternatives -- dramatically higher, where they are likely to stay, even as energy companies work to increase capacity and respond to market conditions. Brothwell says that investors should resp...
Five 'plain vanilla' closed-end funds for these markets
June 03, 2022 14:39 - 12 minutes - 12.1 MBWith the volatility and downward pressure in the market pushing many investors to specialty funds, sector offerings and alternatives, John Cole Scott, chief investment officer at Closed-End Fund Advisors and chairman of the Active Investment Company Alliance returns to the NAVigator this week to talk about some funds that are more basic in strategy, core holdings by nature, and highlights five that represent good values and opportunities now.
BDC Reporter's Marshi is 'quite optimistic,' even if there's a recession
May 27, 2022 13:51 - 10 minutes - 9.93 MBNicholas Marshi, editor of the BDC Reporter, says that business-development companies had a good first-quarter across the board, despite troubles across the broad market. After seven quarters of BDC's generally increasing net asset value per share, and while that growth decelerated during the first three months of 2022, Marshi says it was a "hinge quarter," where inflation, higher interest rates and more started to creep into results. He notes that business-development companies are poised t...
Blue Bay's Farley: Investors 'aren't buying the dips, they're selling the rallies'
May 20, 2022 14:29 - 10 minutes - 10.3 MBDuncan Farley, portfolio manager for BlueBay Asset Management and co-manager of the Destra International Event Driven Credit Fund, says that today's headlines are driving more companies to distraction and creating the types of problems that he sees as investment opportunities. His fund has taken advantage, posting double-digit gains while most of the market has moved in the opposite direction, and he believes that investors willing to buy discounted credits will be rewarded if they can ride ...
Is liquidity 'a feature or a benefit' of closed-end funds?
May 13, 2022 13:22 - 11 minutes - 10.9 MBBill Kelly, president of the CAIA Association, discusses the importance -- which he believes is mostly misplaced -- that many investors place on having daily liquidity in their investments, even though they have no intention of touching the money in the short term. The result of these mis-aligned time frames is that investors pay a real price for liquidity they neither want and need; the offshoot of this thinking is helping to drive the expansion of new issues for closed-end and interval fun...
The search for funds in today's 'painful, ugly shocking' closed-end environment
May 06, 2022 13:14 - 11 minutes - 10.8 MBJohn Cole Scott, chief investment officer at Closed-End Fund Advisors and the chairman of the Active Investment Company Alliance, talks about the search for closed-end funds that can deliver in rising-rate, high-inflation conditions, talks about five issues from different categories that pass muster now, and explains how in today's business-development company space, "Sometimes discounts are expensive and premiums are cheap."
Low-return environment calls for savvy allocations, risk management
April 29, 2022 14:27 - 9 minutes - 9.56 MBNathan Shetty, head of multi-asset for Nuveen and co-manager of the Nuveen Multi-Asset Income Fund, discusses the importance of using proper allocations to generate reasonable and consistent total returns in a low-return environment. Shetty notes that proper diversification and risk management are particularly important in times like today, with so many wild cards, headline risks and uncertainties.
Taggart: Closed-end funds struggled and discounts widened during 1Q
April 22, 2022 13:45 - 11 minutes - 11.1 MBMike Taggart of Taggart Fund Intelligence -- executive director of the Active Investment Company Alliance -- reviews the first-quarter results for closed-end funds, noting that discounts widened out during a rough period for the market, reaching a crossroads where investors are trying to decide now if the discount has hit a level low enough to represent a good risk premium and a buying opportunity. Taggart also discusses interval funds, the focus of an upcoming AICA educational event, and ho...
For private-equity success, commit to riding 'the J-curve'
April 15, 2022 13:14 - 10 minutes - 9.96 MBBob Long, chief executive officer at Conversus -- which manages the Conversus StepStone Private Markets Fund -- returns to the NAVigator to discuss private equity and how investors looking for success must commit to overcoming the J-curve, the start-up period when private-equity investments tend to lose money in the early days in order to be positioned for long-run success. Individual investors wanting to avoid the pain of those start-ups through diversification are increasingly turning to i...
Steven Bavaria on how the 'Income Factory strategy' copes with current conditions
April 08, 2022 13:55 - 11 minutes - 10.7 MBSteven Bavaria, author of “Inside the Income Factory” on SeekingAlpha.com, says that current market conditions have shown the value of focusing on income streams rather than the value of the underlying securities, allowing investors the peace of mind that comes from generating cash-flow and putting that money back to work buying at a discount. Bavaria noted that when a manufacturing company builds a production plant, they don't worry about the resale value of the factory but instead focus on...
Private equity fund lets ordinary investors go after assets previously off-limits
April 01, 2022 13:22 - 11 minutes - 10.9 MBMichael Bell, founder of Primark Capital -- which runs the Primark Private Equity Investments Fund, a closed-end interval fund -- discusses how changing market conditions have reduced the number of public companies and dramatically increased the number of available private equity investments, which he says are best handled in the limited-liquidity structure of an interval fund. It creates an opportunity to buy brand-name middle-market companies that investors can't access in traditional fund...
How to size up BDCs to determine the standout buys
March 25, 2022 14:00 - 11 minutes - 10.7 MBMitchel Penn, managing director of equity research for Oppenheimer and Co., talks about the challenges of analyzing and evaluating business-development companies, and then highlights Runway Growth Finance Corp. -- which his firm expects to outperform the market and competition -- to show the methodology in action and to showcase the place BDCs should occupy in diversified investment portfolios.
Matisse’s Boughton: International, emerging-markets stocks are ‘dirt cheap’
March 23, 2022 22:19 - 17 minutes - 16.9 MBEric Boughton, chief analyst at Matisse Capital and portfolio manager for the Matisse Discounted Closed-End Fund Strategy, says that the war in Ukraine has been creating deep discounts and bigger buying opportunities for closed-end fund investors, noting that emerging markets and international stocks went into the conflict already at low levels, which now means investors are getting ‘a discount on a discount.’ He notes that international equity closed-end funds now are trading at a median di...
How current events are impacting the capital markets
March 18, 2022 13:38 - 10 minutes - 10.2 MBSeth Brufsky, chief executive officer for the Ares Dynamic Credit Allocation Fund, says that conditions since the end of the year have changed from concerns over what the Federal Reserve would do, 'changing the calculus' for how people should and will invest. Brufsky says the focus entering the year was on floating-rate investments, but now that there are lingering concerns about inflation and higher rates that -- along with geopolitical concerns -- are forcing investors to re-evaluate prior...
Your questions answered with Mike Taggart, AICA executive director
March 11, 2022 14:48 - 10 minutes - 9.87 MBMike Taggart of Taggart Fund Intelligence, the executive director of the Active Investment Company Alliance, returns to The NAVigator following up on his recent discussion of buying assets rather than discounts by answering some questions from the audience about the persistence of discounts and where discounts fit into the picture once you have purchased a fund.
AICA's Scott: Closed-end fund 2.0 is off to a strong start
March 04, 2022 14:31 - 10 minutes - 10.6 MBJohn Cole Scott, chief investment officer at Closed-End Fund Advisors and the chairman of the Active Investment Company Alliance, says that 20 investment firms have launched 30 new funds under the 'Closed-End Fund 2.0' format since 2019, and the results and opportunities are promising. While the new funds show an average discount over 7 percent, the new structure returns the funds to net asset value after 12 years, which means that some of these funds are long-term bargains right now; he nam...
Taggart: As unrest widens discounts, buy the asset not the bargain
February 25, 2022 15:03 - 9 minutes - 8.95 MBMike Taggart, founder of Taggart Fund Intelligence and executive director of the Active Investment Company Alliance, says that the stock market's rough January along with the war between Russia and the Ukraine have put the market in a tizzy and widened discounts for closed-end funds by over 1 percent on average this year, but he notes that while discounts have become attractive, they don't make for automatic buying opportunities. Some closed-end funds, Taggart says, will stay at deep discoun...
BDCs and middle-market credit can solve rising-rate puzzle
February 18, 2022 13:32 - 11 minutes - 11.3 MBChris Oberbeck, chairman and chief executive officer at Saratoga Investment Corp., says that the structure of business-development companies -- which allows assets to increase in value when interest rates rise, while keeping liabilities fixed, thereby raising spreads -- makes them particularly attractive to investors looking for better real yields in a rising-rate environment. Oberbeck explains, generally, how BDCs will be able to weather the first rate increase, whenever it happens, with mu...
Bonus episode: Rate and inflation picture are triggering rotation
February 14, 2022 15:56 - 18 minutes - 17.3 MBMaury Fertig, chief investment officer at Relative Value Partners, discusses the factors he considers when picking closed-end funds to add to client portfolios, and how those criteria have been impacted by headlines about rising rates and inflation, along with the stock market's heightened volatility and January losses. Fertig says that current conditions have changed some of his focus, moving him away from floating-rate funds -- which were trading at a significant discount a year ago, but w...
What to expect from closed-end funds in a rising-rate environment
February 11, 2022 13:52 - 10 minutes - 10.4 MBMike Taggart, founder and chief executive officer at Taggart Fund Intelligence -- the recently appointed executive director of the Active Investment Company Alliance -- talks about his research into how closed-end funds have performed in rising-rate cycles, and also looks at how senior-loan funds perform, noting that the closed-end fund structure can make it harder for senior loans to live up to their narrative as being a plus asset when rates are going up.
In the closed-end discount cycle, now is the time to be buying
February 04, 2022 14:24 - 11 minutes - 10.9 MBRob Shaker, portfolio manager at Shaker Financial, says that the market's recent struggles have re-started a cycle and repetitive pattern that closed-end fund investors should recognize and take advantage of. It starts when excessive selling pressures -- which the market experienced in January -- results in 'excessive selling' that widens discounts; once those selling pressures ease, the market rebalances and restores equilibrium, and investors take advantage of the bigger discounts to snap ...
Blue Bay's Farley: Lots of market events, limited good investment opportunities
January 28, 2022 14:30 - 13 minutes - 12.5 MBDuncan Farley, portfolio manager at BlueBay Asset Management -- manager of the BlueBay Destra International Event-Driven Credit Fund -- says that the many headline events affecting the market aren't all buying opportunities. The best opportunities in event-driven investing come from good companies with bad balance sheets or difficult circumstances, where the interval fund structure allows management to ride them back to good health, generating above-market returns in the process.
With or without legislation, infrastructure's on the upswing
January 21, 2022 14:21 - 10 minutes - 9.78 MBConnie Luecke, senior portfolio manager for Duff and Phelps Investment Management and chief investment officer of the DNP Select Income Fund says that the recently passed infrastructure bill -- plus the potential for elements of the Build Back Better bill to be broken out and passed -- should provide a business boost to energy and utility companies, communications firms and more, but she also explains why legislation isn't the only reason why infrastructure is poised to be a strong sector in...
Cliffwater's Condrell: Middle-market credits smooth portfolio returns
January 14, 2022 13:56 - 11 minutes - 10.8 MBAlex Condrell, managing director at Cliffwater discusses the firm's direct lending index and corporate lending fund and how investments in middle-market corporate credit should stand up to the challenges of rising inflation and interest rates, providing something close to historic return levels of 9 percent for the asset class without extending recklessly out the risk spectrum.
Flat Rock sees big value in the trade-off of liquidity for return potential
January 07, 2022 14:43 - 10 minutes - 10.1 MBRobert Grunewald, chief executive officer at Flat Rock Global discussing how the interval-fund structure provides stability that allows a 'non-bank bank' -- which is the way he describes his firm -- to trade off some liquidity in pursuit of higher fixed-income returns. Operating in 'middle market credits' and investing in first-lien credits, Grunewald says that despite changing interest-rate and inflation conditions it remains reasonable to expect a return in the 7 percent range for the year...
John Cole Scott's crystal ball view of 2022 in closed-end funds
December 30, 2021 15:20 - 10 minutes - 9.88 MBJohn Cole Scott, chief investment officer at Closed-End Fund Advisors and the executive chairman of the Active Investment Company Alliance, returns to the podcast this week and turns his lens forward, giving his 2022 projections for discounts, new funds, shareholder activism and more, and including some funds he says are well-positioned and constructed to benefit from the economic conditions that lie ahead.
Big premiums and high dividend yields key a banner year for closed-end funds
December 23, 2021 14:17 - 9 minutes - 9.55 MBJohn Cole Scott, chief investment officer at Closed-End Fund Advisors and the executive chairman of the Active Investment Company Alliance, reviews 2021, discussing the high number of closed-end funds that are currently trading at premiums, and the rebound that has represented in performance, as well as the expansive use of leverage, current high levels of dividend yields and more.
How shareholders benefit from 'follow-on offering' trend
December 17, 2021 14:33 - 10 minutes - 10.4 MBNathan Briggs, a partner in the asset management practice at Ropes and Gray, discusses the burgeoning trend and inner workings of 'follow-on offerings' -- where closed-end funds raise additional capital and add to their outstanding shares -- and the mostly positive impact these actions have for shareholders.
Activism isn't waning, but rules governing it are changing
December 10, 2021 13:03 - 10 minutes - 10.3 MBThomas DeCapo, partner at Skadden, Arps -- one of the largest law firms representing interests in the closed-end fund industry -- discusses developments and changes to the activist environment, noting that one thing he believes will not change is the high level of activity due to the many funds facing activists with stakes of 10 percent or more. DeCapo also discusses industry rumors that regulators are considering changing control-share statutes that have a major impact on how closed-end fun...
Consider an interval fund as the place for your muni bond holdings
December 03, 2021 13:00 - 8 minutes - 8.58 MBParth Doshi, vice president of closed-end funds at Nuveen, discusses the firm's new interval fund -- Nuveen Enhanced High Yield Municipal Bond Fund -- and how it compares to other closed-end funds. Muni bonds are a new area for the interval fund structure -- the Nuveen offering is just the second muni interval fund -- and Doshi discusses why investors might favor one structure over the other, or how both could be used in a diversified portfolio.
Infrastructure needs will fuel real asset plays for decades
November 26, 2021 14:41 - 9 minutes - 8.92 MBGaal Surugeon, portfolio manager at Brookfield Asset Management's Public Securities Group, says that investing in physical assets like infrastructure and real estate provides inflation protection with stabilized yield potential and long-term growth prospects tied to the economic cycle, but the short- and mid-term prospects for real assets is also attractive now, given the economic recovery, investments in infrastructure and the need to fund upgrades to the underpinnings of society like airpo...
A check on BDC developments, and performance versus REITs
November 19, 2021 14:34 - 11 minutes - 10.9 MBStephen Hester, partner at Wide Moat Research and editor at the Intelligent REIT Options Advisor newsletter, offers his take on new developments within the business-development company realm, and compares how current market conditions are making BDCs an attractive alternative to real estate investment trusts, noting that the standard BDC cycle periodically makes them a buying opportunity -- especially compared to REITs -- and one of those times is now.
Closed-end fund 2.0 is a bigger deal than the ETF revolution
November 12, 2021 14:27 - 10 minutes - 10.1 MBMichael Spatacco, director at Bancroft Capital, says that the latest evolution in closed-end funds will have more impact on the closed-end fund business and the evolution of funds and how they are sold than exchange-traded funds had on the traditional mutual fund industry. In a wide-ranging discussion on the state of the closed-end fund business, Spatacco says that the ETF evolution mostly changed the way funds are built, with the underlying investments remaining mostly the same; the changes...
Record supply of high-yield bonds helps to overcome inflation fears
November 05, 2021 13:56 - 9 minutes - 9.47 MBMatt Kence, portfolio manager for the Aberdeen Credit Income Strategies Fund (ticker ACP), says that the headwinds facing high-yield investors -- higher inflation and concerns over rising interest rates -- can be overcome with diligent security selection from the wider range of options available now thanks to record levels of bond issuance. Kence notes that if the economy delivers inflation and growth at the same time, high-yield bonds should do well, but the worry is that if inflation stunt...
The outlook for BDCs is strong heading into 2022
November 02, 2021 13:34 - 12 minutes - 12 MBJohn Cole Scott, chief investment officer at Closed-End Fund Advisors and founding chairman of the Active investment Company Alliance, gives his take on wher business-development companies stand midway into earnings season and with the New Year just around the corner. He highlights four individual BDCs, talks about portfolio construction and highlights an upcoming BDC event that the Alliance will host later in November.
Market conditions should drive bond investors to floating-rate loans
October 22, 2021 13:16 - 10 minutes - 10.4 MBLarry Holzenthaler, an investment strategist and analyst at Nuveen who specializes in floating rate and high yield investments says that income-oriented investors who have allocations to junk bonds are likely under-allocated to loan funds, which offer equal returns with less risk. Holzenthaler says the floating-rate opportunities are particularly attractive in closed-end funds, thanks to persistent discounts -- despite more interest in loans -- that let investors buy the economic earning pow...
'My fund wants to pay distributions in shares; is this good or bad?'
October 19, 2021 13:44 - 10 minutes - 9.82 MBIn this bonus edition of The NAVigator, John Cole Scott, chief investment officer at Closed-End Fund Advisors and executive chairman of the Active Investment Company Alliance again helps Chuck Jaffe answer audience questions, this time going into the nuts and bolts of how funds work to answer a complex inquiry about proxy votes, distribution decisions and how investors should view and respond to these actions.
Solid energy infrastructure plays aren't going away, now or long-term
October 15, 2021 13:11 - 10 minutes - 9.89 MBSam Brothwell, director of research at Energy Income Partners, says that the frothy market for energy has created solid opportunities for infrastructure plays, such as pipelines, storage facilities, and liquid natural gas logistics companies. Brothwell discusses the emergence of renewables, noting that while they hold tremendous potential, they are not replacing legacy energy sources for use, and they should not replace those companies in investment portfolios either.