URTH - LGI: Unique Equity CEF With Fully-Covered Distribution At An Enormous Discount

2024-03-13 11:35:45 ET

Summary

• The Lazard Global Total Return and Income Fund Inc offers a high level of current income without sacrificing potential equity gains.
• The LGI closed-end fund has outperformed major indices recently, despite having lower exposure to mega-cap technology companies than the major indices.
• The fund primarily invests in common equities, with a small allocation to emerging market debt securities and currencies.
• The fund fully covered its distributions in 2023 and currently trades at an enormous discount to net asset value.
• The fund has underperformed the major indices over the long term, and I cannot see any near-term catalyst that will change this.

The Lazard Global Total Return and Income Fund Inc ( LGI ) is a closed-end fund, or CEF, that investors can purchase in order to accomplish their goals of generating a high level of current income from the assets in their portfolios. Unlike with many other closed-end funds, though, this one does not require the investor to sacrifice some upside potential of common equities in exchange for income.

After all, with many other income-focused funds, the fund invests in either fixed-income securities that have very limited potential upside or it runs some sort of options strategy that has the end result of capping the potential gains that can be earned from the equities held in the portfolio. This fund does neither, but it still manages to boast a 7.86% current yield. This is a very respectable yield from an equity fund, but it cannot really compete with the incredibly high yields that are currently offered by the best junk bond and leveraged loan funds. However, the fund's global diversification and exposure to uncapped common equities might still make it appealing to some investors....

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