Our Investment Process

Why do we focus on closed-end funds?

Limited participation from institutions, hedge funds and market makers. Retail investors dominate closed-end fund investing, creating volatility due to "fear or greed" mentality.

Traditionally a one-sided market with few short sellers, buyers are paid for providing liquidity. Limited research coverage allows for superior proprietary research ideas. Offer access to some of the top managers at significant discounts to Net Asset Value (NAV).

Funds can obtain leverage at significantly lower funding costs than those offered to individual retail clients. Volatile discounts spreads allow for discount arbitrage, share price outperformance of NAV and enhanced yield opportunities.

Understand Client Needs

Evalute Client Risk Tolerance – Recommend Customized Allocation

Security Universe

650 Closed-End Funds 500+ ETFs
Market Cap of Closed End Funds = $200 Billion / Market
Cap of ETFs = $750+ Billion

Filter the Universe

Strip out illiquid funds eliminate unattractive asset classes
Indentify CEFs with Catalyst to Narrow Discounts

Evaluate Securities

  • Manager Performance
  • Underlying Assets
  • Relative value of sector
  • Discounts to NAV
  • P/E, P/CF, PEG, P/B
  • Expense Ratio
  • Distribution Policy
  • Lifeboat Provisions
  • Leverage
  • Embedded Gains
  • Technicals
  • UNII

Portfolio

30-40 Securities with a 1-3 Year
Time Horizon