Investors prioritizing higher yield and capital appreciation should consider investing in the closed-end fund (CEF) market. Closed-end funds often provide higher distribution rates than traditional asset classes, especially when they are trading at discounts.
With more than 20 years of experience offering a suite of multi-asset CEFs totaling more than $8 billion in AUM as of April 30, 2024, Calamos Investments has compiled a rich knowledge base on which to draw. Research from Calamos noted that closed-end fund distributions averaged 7.3% in 2023. Additionally, the yields from CEFs outperformed, on average, many of the other higher-yielding options on the market.
Whether investors seek attractive current income or want to reinvest dividends for greater potential appreciation down the line, closed-end funds have the potential to generate significant results. Investing in a CEF can also provide crucial portfolio diversification, as they can invest in specialized asset classes, including thematic and non-US options, alongside a range of income-oriented strategies.
CCEF, A New ETF, Offers Experienced Access to an Attractive Portfolio of Closed-End Funds
In addition to its own CEFs, Calamos also offers an ETF fund-of-funds, the Calamos CEF Income & Arbitrage ETF (CCEF). This fund is actively managed and aims to provide investors with monthly income and capital appreciation. CCEF’s investment strategy utilizes multiple return drivers seeking to produce specialty alpha – total return and high distribution rates – capitalizing on Calamos’ long-standing experience in closed-end fund dynamics and ability to identify market inefficiencies.
CCEF engages in arbitrage opportunities (exploiting market inefficiencies) in the closed-end fund market by buying undervalued CEFs and selling them when the Calamos investment team believes they are no longer undervalued. CCEF applies quantitative and fundamental analysis to identify opportune CEFs trading at discounts.
High Monthly Distribution Yields
CCEF is already providing investors with strong monthly distribution yields. As of April 30, 2024, the fund had a distribution yield of 8.82%.
Overall, the ETF’s focus on closed-end funds can provide investors with strong yield and value. The fund’s willingness to apply alternate income strategies cements CCEF as a good pick for investors seeking high monthly yield.
“Closed-end funds offer opportunities for both capital appreciation and income. The Calamos fund further benefits from active management,” noted VettaFi Head of Research Todd Rosenbluth.
For investors seeking experienced, active management when it comes to closed-end funds, CCEF’s investment team at Calamos Investments taps into decades of experience navigating the closed-end fund market.
For more news, information, and analysis, visit the Alternatives Channel.
Disclosure Information
Before investing, carefully consider the fund’s investment objectives, risks, charges, and expenses. Please see the prospectus and summary prospectus containing this and other information, which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
An investment in the Fund(s) is subject to risks, and you could lose money on your investment in the Fund(s). There can be no assurance that the Fund(s) will achieve its investment objective. Your investment in the Fund(s) is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in the Fund(s) can increase during times of significant market volatility. The Fund(s) also has specific principal risks, which are described below. More detailed information regarding these risks can be found in the Fund’s prospectus.
Risks of investing in the Fund include risks associated with (1) the Fund’s investment in closed-end fund shares; (2) the closed-end funds’ investments; and (3) any other investments of the Fund, including investments in ETFs, BDCs, and derivative instruments. The shares of closed-end funds may trade at a discount or premium to, or at, their NAV. The securities of closed-end funds may be leveraged. As a result, the Fund, may be exposed indirectly to leverage through an investment in such securities. An investment in securities of closed-end funds that use leverage may expose the Fund to higher volatility in the market value of such securities and the possibility that the Fund’s long-term returns on such securities (and, indirectly, the long-term returns of its shares) will be diminished.
Additional Information
In addition, closed-end funds are allowed to invest in a greater amount of illiquid securities than open-end mutual funds. Investments in illiquid securities pose risks related to uncertainty in valuations, volatile market prices, and limitations on resale that may have an adverse effect on the ability of the fund to dispose of the securities promptly or at reasonable prices. The Fund may invest in BDCs, which typically operate to invest in, or lend capital to, early stage-to-mature private companies as well as small public companies.
The Fund’s investment in shares of ETFs subjects it to the risks of owning the securities underlying the ETF, as well as the same structural risks faced by an investor purchasing shares of the Fund, including authorized participant concentration risk, market maker risk, premium-discount risk and trading issues risk. Derivatives are instruments, such as futures and forward foreign currency contracts, whose value is derived from that of other assets, rates or indices. The use of derivatives for non-hedging purposes may be considered more speculative than other types of investments.
Calamos Financial Services LLC, Distributor
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Calamos Financial Services LLC
2020 Calamos Court | Naperville, IL 60563
866.363.9219 | www.calamos.com | [email protected]
2023 Calamos Investments LLC. All Rights Reserved.
Calamos and Calamos Investments are registered trademarks of Calamos LLC.
