- Some CEFs have managed distribution policies that are linked directly or indirectly to their NAVs, allowing investors to forecast changes in distributions with varying accuracy.
- Recent volatility has already caused some CEFs to lower their distributions as a result of the March drawdown, causing their discounts to widen relative to their sectors.
- Tactically, we like ERC and ERH here as they should see a rise in distributions in Q2, accompanied by a reversal of their recent discount underperformance.
- We would also tactically tilt away from RIV and OPP whose distributions will likely shift lower at the start of the year, assuming the funds retain the current MDP.
For further details see:
Preparing For Distribution Changes For CEFs With MDPs