Times are interesting to say the least as we converge on a period in which the Federal Reserve cuts interest rates just as we come up against a national election that may be close or contested in many races, including the US presidency.
On the one hand, the Fed has begun to loosen policy to stimulate growth now that the inflation rate is down and some signals of a slowing economy have materialized. A consequence of Fed rate cuts means investors, who had $6.3 trillion tucked under money market fund mattresses in September, may be prompted to seek higher yields elsewhere.
A Record Sum of Cash Sits in Money Market Funds
Money Market Fund Asset Flows September 2004 to August 2024
On the other hand, expect no small amount of volatility—some likely downward—as a highly contentious election season kicks into high gear, investors worry that the Fed may have acted too late, and murmurs of recession are again making the rounds. Where should a risk-conscience investor turn?
CCEF: Potentially the Right Fund for the Times
Investors looking to diversify their portfolio and achieve potentially higher income may want to consider a closed-end fund ETF, combining the advantages of closed-end funds (CEFs) with the tax efficiency of an ETF wrapper. Calamos CEF Income & Arbitrage ETF aims to provide investors with capital appreciation and high monthly income by investing in a portfolio of discounted closed-end funds.
Focusing on the overall merits of CEFs, CCEF can potentially benefit a wide variety of investor strategies in these “interesting times” and beyond.
- Investors seeking to generate monthly income can incorporate the high potential distribution rate of CEFs, which often outperform more traditional asset classes, especially in cases where closed-end funds are trading at a discount.
- Because CCEF primarily invests in discounted, closed-end funds, it aims to capture appreciable returns as the discount between price and NAV narrows.
- Investors seeking portfolio diversification can also potentially benefit from CCEF. The fund invests in a range of closed-end funds, including options, equities, and fixed income, providing portfolio diversification while avoiding overconcentration.
Since the fund’s inception on January 16, 2024, through August 31, 2024, it generated double-digit returns of 16.29% NAV and 16.33% market price, outperforming the S-Network Composite Closed-End Fund Index (SNCEFCT) return of 13.84%. The fund also paid out an attractive unsubsidized 30-day SEC yield of 7.17% as of August 31.
While part of CCEF’s success so far can be attributed to its positive performance, this also indicates the fund’s broad appeal. Whether an investor seeks value with appreciation potential, diversification, monthly income, or experienced CEF investment managers, CCEF has multiple attractive traits.
For more on how CCEF—drawing on two decades of active CEF expertise—can potentially deliver high monthly income, capital appreciation, and diversification to an investment portfolio, visit this link Calamos CEF Income & Arbitrage ETF.
This article was adapted from a VettaFi ETF Trends article.
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Before investing, carefully consider the fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
Performance data quoted represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Returns at NAV reflect the deduction of the Fund’s management fee and other expenses, which can be found on the next page. For the most recent Fund month-end performance information, visit www.calamos.com or call 1-866-363-9219.
The performance of the Fund will differ, and may vary materially, from that of any index. There is no assurance the Fund will achieve or maintain its investment objective. In addition, convertible securities have unique risks not applicable to other types of securities, including that the value of convertible securities is influenced by both the yield of non-convertible securities of comparable issuers and by the value of the underlying common stock.
You can purchase or sell common shares daily. Like any other stock, market price will fluctuate with the market. Upon sale, your shares may have a market price that is above or below net asset value and may be worth more or less than your original investment.
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. 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.
S-Network Composite Closed-End Fund Index (SNCEFCT) measures the performance of the total closed-end fund universe. Indexes are unmanaged, do not reflect the deduction of fees and expenses, and are not available for direct investment. Index data shown is from the last day of the month of the Fund’s share class inception, since comparative index data is available only for full monthly periods.
30-day SEC yield reflects the dividends and interest earned by the Fund during the 30-day period ended as of the date stated above after deducting the Fund’s expenses for that same period.
Calamos Financial Services LLC, Distributor
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
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