The NAVigator

Rob Thummel, Senior Portfolio Manager at Tortoise Capital, says that for all of the power needs created by artificial intelligence, producers still need their power costs to be reasonable, and he expects that natural gas will lead the way going forward. Thummel, who runs Tortoise Energy Infrastructure fund, says current conditions for energy infrastructure remain the most favorable he has seen in 30-plus years as a portfolio manager, largely because energy is "the foundation of the A.I. five-layer cake" famously described by Nvidia president Jensen Huang. Thummel says that while investors have been light on energy allocations historically...

Treasury rates hit their highest level in nearly 20 years this week; in response, the Treasury announced it was doubling its long-end buyback capacity. John Cole Scott, President of CEF Advisors, discusses what it all means for fixed-income markets and how it is impacting closed-end funds and their investors. The two actions at the center of the action call for a barbell approach, says Scott, who serves as chairman of the Active Investment Company Alliance; for the time being, however, it, noting that at least for the time being it is more about portfolio tilts and mild changes than an...

When closed-end funds catch mentions in the mainstream media, the recommendations often focus on yield without digging deeper. In this episode of The NAVigator, John Cole Scott, President of CEF Advisors, looks at some recent closed-end fund recommendations from articles on Forbes and Seeking Alpha, and breaks down how those funds do through the "trifecta analysis" his firm uses to select funds, pointing out the shortcomings of using a rigid criteria or focusing on partial information to make decisions. Scott, who also is the chairman of the Active Investment Company Alliance, offers suggestions for what he would use in...

Discount-capture investor Rob Shaker, Portfolio Manager at Shaker Financial Services, says that while closed-end fund discounts have widened through a strong season of earnings and a market returning to flirt with new highs, much of that action has been "good widenings," where a fund's net asset value goes up more than the price of the closed-end fund itself. With the market "snapping around" with heightened volatility, Shaker says that the indexes have been pulling up faster than closed-end funds can move, creating attractive buying opportunities. While liking that potential for gains, Shaker says that closed-end funds generally "have been...

Scott Caraher, Head of Senior Loans at Nuveen, says that the higher-for-longer interest rate environment has created "one of the most interesting and dynamic times" he has seen for senior loans in his 25-year career. Caraher, who manages Nuveen Floating Rate Income in both its closed-end and open-end forms, says that because senior loans don't face interest-rate risk, they are a powerful play in a market where Federal Reserve policy on rate direction is uncertain, noting that it's possible to create strong portfolios yielding about 7 percent, which he called "incredibly attractive ... on both an absolute and relative basis."

John Cole Scott, President of CEF Advisors, provides takeaways from the second quarter for closed-end funds and business-development companies, noting that the trend was for investors to make most of their money on net asset values rather than narrowing discounts, which creates potential for a strong second half of 2026 if there is an uptick in investor sentiment. Scott, the chairman of the Active Investment Company Alliance, brought forward data from his firm's quarterly outlook presentation this week, noting that it shows that while headline risks have hurt BDC prices, underlying strength should make for a strong rebound later in...

Ray DiBernardo, Portfolio Manager for the XAI Madison Equity Premium Income fund, says he's concerned about the market's valuation levels — noting that it "has been expensive for quite some time" — and while he is not expecting "dark clouds and a horrible environment," there's more downside risk, which could lead to market compression that puts covered-call strategies back into the spotlight as a defensive play. DiBernardo, an analyst at Madison Investments, says the proliferation of options strategies should make investors more diligent about exploring strategies, and he discusses single-stock options versus index options and the risk-reward picture with each. DiBernardo note...

Axel Merk, President and Chief Investment Officer at Merk Investments, discusses Saba Capital's activist campaign that got him ousted as portfolio manager and president of ASA Gold and Precious Metals Ltd., a closed-end fund that was up nearly 200% last year but that still was branded with the label of being a "poor performer." Merk, who took over the closed end fund in 2016 and helped to nearly quadruple its assets in the last decade, says new management has no experience running a gold fund, and is only interested in narrowing the discount and generating fees for itself. He filed with...

Kevin Dreyer, Co-Chief Investment Officer for value at Gabelli Asset Management, says that there are plenty of values left in a market that has returned to record levels, particularly when valuing stocks based on "what an informed industrialist or buyer would pay to buy the whole business." Dreyer, part of the team running Gabelli Equity Trust and some of the firm's other closed-end funds, says that finding businesses that are "A.I. resilient" and able to withstand and/or benefit from the development of artificial intelligence is important now, and he noted that sports teams are a big draw...

John Cole Scott, President of CEF Advisors, attended the Private Credit Summit hosted this week in New York City by Dechert LLP, and came away with a sense that private-credit markets have not yet gotten to the overheated levels that could turn investor fears of a blow-up into a financial reality. Scott, also the chairman of the Active Investment Company Alliance, discusses "stress tests" that Fitch Ratings did on some large perpetual business development companies to see how they would perform if market conditions changed dramatically, and found that the BDCs did not break under severe conditions. He also...

Ken Burdon, Partner in the registered fund practice at Simpson Thacher & Bartlett, discusses the Supreme Court's recent ruling against activist investor Saba Capital, a decision that could have a chilling effect on shareholder activism in the future. Burdon says the decision removes a key path based on the Investment Company Act of 1940 that activists took in pursuing cases over fund fees and structure. It doesn't stop the activists from pursuing cases, but makes it harder to do so, forcing them into state courts. Critics of activism have long held that professional arbitrageurs used federal courts to pressure closed-end funds...

John Cole Scott, President of CEF Advisors, says that index discounts are wide when compared to their three-year history, which makes it important for investors to find names where wide discounts are supported by improving fundamentals. Scott, who also is chairman of the Active Investment Company Alliance, says that both the national muni CEF index and the taxable bond CEF index have seen wider discounts that have "flipped relative values" especially given current economic conditions. Using his firm's "trifecta analysis," Scott examines four funds that he sees as the right kind of opportunities now.

Steve Baffico, Executive Vice President and head of listed products at Bluerock, which runs the Bluerock Private Real Estate fund, expects the real estate market to benefit as money moves from private credit , business-development companies and direct-lending strategies in pursuit of something with "hard assets and low obsolescence." That HALO trade should drive growth moving forward; Baffico discusses what the fund is focused on as it continues its transition from an interval fund to being a closed-end fund. That journey has included four hikes in distributions over the last four months, and Baffico says he explains what the firm...

Gordon Hamilton, Senior Managing Director for Kayne Anderson, Portfolio Manager for the Kayne Anderson Energy Infrastructure fund, says that there will be a big call on U.S. energy infrastructure companies to meet global demand for propane, butane, crude oil and natural gas as the world gets through the current energy crisis created by war in Iran. Coupled with an energy "supercycle" driven by artificial-intelligence needs, it is creating a positive long-term demand picture where infrastructure should be able to have persistent performance even if current events or A.I. expectations add concerns to the market.

Bryce Doty, Senior Portfolio Manager at Sit Investment Associates, says that "the worst is over as far as yields going up," noting that the next shift could be down, but he calls the conditions "tricky" and emphasizes that investors "need to be in the right part of the curve." Doty's case hinges on oil prices;  if oil stays below $110, it's viewed as inflationary, but above that level "we have a problem, and so does the rest of the world." At that point, central banks will have to cut rates to "save economies from disaster." Doty, whose team manages $2.7 billion i...

John Cole Scott, President of CEF Advisors and the Chairman of the Active Investment Company Alliance, looks at the recent issues in business-development companies, which got hammered in March as the market punished software investments, including lenders who made loans to software firms. While BDCs rebounded in April, they remain significantly down, and Scott discusses how the companies with the biggest troubles have higher yields and bigger discounts, but the top performers are delivering a better return on equity and are the better, safer bet while the industry gets through the current rough patch.

Matt Freund, Co-Chief Investment Officer at Calamos Investments, says that productivity, GDP growth and earnings are "what matters," and that the headline risks that are driving consumer sentiment are "distractions" from a market backdrop that is solid. He says inflation remains the big risk, but notes that the investor sentiment is creating opportunities, particularly in closed-end funds, and especially in senior loans and high-yield bonds, where discounts have widened this year.

Dr. Mark Mobius, widely considered the father of emerging markets investor and a man who helped put the world into everyone's grasp during his long career running funds at Templeton, passed away in mid-April. John Cole Scott, President of CEF Advisors, recounts Mobius' legacy and lasting lessons by digging into interviews conducted by his father, George Cole Scott, Founder of the Closed-End Fund Letter, with Mobius over the decades. Scott, the chairman of the Active Investment Company Alliance, makes sure to include why Mobius felt that the closed-end fund structure was particularly useful for emerging markets investors following his...

David Gutierrez, Vice President at Liberty Street Advisors and part of the team running the Private Shares Fund, says that private markets are similar enough to public markets that artificial intelligence is now one of the big sweet spots in both. However, he says the best opportunities involve infrastructure more than AI itself. Gutierrez notes that the Private Shares Fund—an actively managed, continuously offered closed-end interval fund investing in late-stage venture capital and private company opportunities—is focusing heavily on AI infrastructure right now. For instance, he explains how the shift from copper-based to optical-based networking in servers has be...

Rob Shaker, Portfolio Manager at Shaker Financial Services, says that while the headlines may have investors on edge, the fear-based selling that gripped the market around the start of war in Iran created a "generic widening" of discounts for closed-end funds. Shaker, who is a "discount-capture investor," says the current widening and recovery was caused mostly by "the irrational effects of excessive selling pressures overall," which means that the bad news is not creating fundamental problems for industries so much as temporary issues affecting share values. He says we could see more generic widening and narrowing until the market...

With the market kicking business-development companies in the teeth, John Cole Scott , President of CEF Advisors, digs into his firm's data looking at "artificial-intelligence risk scoring" to find BDCs that have been hurt by headlines without holding tainted portfolios. BDCs relied heavily on software companies, due to the tech sector's blend of strong fundamentals, innovation and ability to resist economic fluctuations, but have suffered as investors fear for the future of software in the face of challenges from artificial-intelligence companies. Scott, who also serves as chairman of the Active Investment Company Alliance, went looking for BDC's with "low AI...

Matt Weyandt, a client Portfolio Manager on the listed real assets team at Nuveen, discusses how buying "location-specific hard assets" in essential industries that deliver to a "Halo theme" — heavy asset, low obsolescence — creates a buffer against a market that is being driven by headlines and geopolitical risks. Weyandt says that real estate, infrastructure, utilities, midstream energy companies, communications and commodities are not immune to the headlines, but they are built to deliver regardless of market conditions, and he discusses Nuveen's wide range of options for accessing those assets through closed-end funds.

Kim Flynn, president at XA Investments, a firm that specializes in alternative investments, says recent private-credit bad news events have widened discounts and raised concerns over business-development companies and interval funds, but have likely created a buy-the-dip moment in the industry. She discusses how fund sponsors and advisers must do a better job educating investors on how these products get through worrisome times, but says she does not think the headlines or their attendant challenges on direct lenders will discourage yield-hungry private-credit investors in the long run. 

John Cole Scott, President of CEF Advisors, says that closed-end funds are being buffeted in two directions due to current headlines, with war in Iran impacting net asset values and anchored interest rates impacting levered closed-end funds and discounts shifting to reflect both situations. Scott, who also serves as the Chairman of the Active Investment Company Alliance, says sectors that have benefitted from the chaos have been MPL and energy funds, while business-development companies and CLO equity funds have suffered. Scott also put his firm's "Trifecta analysis" to work, with four funds to consider now: ticker symbols AFB, ARDC...

Robert Gilhooly, Senior Emerging Markets Economist at Aberdeen Investments, says that the continuing war in Iran has put pressure on oil prices, but he expects them to stabilize short-term while the market determines what happens next. If the outlook becomes one where the Straits of Hormuz are closed off to shipments for a longer stretch of time, he says "If things get really bad, you could be talking $175 for a barrel of oil." Gilhooly discusses the investment adage that the first shots of war signal a time to buy, and says that investors likely will see solid opportunities, but...

Ryan MacDonald, Portfolio Manager for the Bluerock Private Real Estate Fund, says that in a world teeming with market worries and broad geopolitical concerns, private real estate is "uniquely boring, in a good way." He says the market has taken its pain over the last three years through interest rate changes and the market cycle, but now values have receded creating a solid entry point. MacDonald, who also serves as chief investment officer at Bluerock, says that "Entry point is the single biggest driver of future value for private real estate returns," and he notes that on an inflation-adjusted...

The stock market has been beating up business-development companies, with the sell-off largely being blamed on the artificial intelligence boom and the high number of loans that BDCs make to software firms. Behind the theory that software companies will struggle to pay debts as artificial intelligence renders their products less useful and attractive, there are real loans, and John Cole Scott, President of CEF Advisors, digs into the math that is impacting the lenders and BDCs in general. Scott, who also serves as Chairman of the Active Investment Company Alliance, discusses two BDCs and shows how the headlines could...

Robinhood Markets is launching its first closed-end fund, Robinhood Ventures Fund I, with the first IPO the closed-end fund space has seen in about four years and John Cole Scott, President of CEF Advisors, sizes up the prospects for the new issue, which intends to be a concentrated portfolio of private companies. Scott, the chairman of the Active Investment Company Alliance, discusses the role private equities can play in a portfolio, as well as the challenges investors face in sizing up a fund with a net asset value entirely based on the purported market value of shares that don't...

Chris Oberbeck, chairman and chief executive officer at Saratoga Investment Corp., says that  increases in default rates are more of a return to normal than a sign of trouble for business-development companies or the economy. While stories like the First Brands bankruptcy and fraud case have market watchers looking for more trouble, the rest of the headlines in the industry are much more routine, which leads Oberbeck to think that recent activity is more a hangover coming from a time of particularly low defaults, rather than a sign of the start of a bad business cycle.

Kyle Brown, Chief Executive Officer at Trinity Capital, gives his outlook for the private credit and lending space, and notes that there could be some challenges for business development companies and private lenders late in the current economic cycle because returns from private credit generally have been declining. That has meant single-digit leveraged returns, Brown says, so "Investors are not happy." That, in turn, has led to redemptions in private funds and falling stock prices. Still, Brown says, that has created some opportunities for lenders and investors who keep digging to find gems; he sees the technology sector and...

Nick Robinson, Deputy Head of Global Emerging Market Equities at Aberdeen Investments, says that the artificial intelligence wave that has pushed domestic stock markets to record highs is readily apparent around the world — including in countries that are not necessarily synonymous with technology — and that the capital expenditure wave should continue to power foreign markets if companies can monetize the potential gains created by AI. He also discusses how markets are weathering geopolitical events and why he thinks they will continue to push higher despite nervous headlines.

John Cole Scott, President of CEF Advisors, reviews the key takeaways from his firm's fourth-quarter review of action in the closed-end fund industry, focusing on fund consolidation trends that have occurred in the middle of booming asset growth for the industry, as well as discount levels and whether narrowing discounts set up 2026 for more muted results. Scott, the chairman of the Active Investment Company Alliance, also noted that a number of closed-end fund categories are off to a fast start to the new year, and while areas like international equities and convertible bonds are continuing strong performance from 2025, other...

Stephen Davis, closed-end fund product specialist at Nuveen, says that while 2025 was a strong year for closed-end fund performance, price returns exceeded net asset value (NAV) gains, reflecting a narrowing of discounts, continuing a trend from 2024. Those narrower discounts will make it harder for that broad trend to continue in 2026, but he noted that municipal bonds and senior loans are two areas that should provide promising opportunities. Davis noted that 2025 saw significant merger and rights offering activity, a trend he expects to continue in the new year.

Kimberly Flynn, President at XA Investments, discussed the just-launched XAI Interval Fund Credit Index, which tracks the performance of non-listed closed-end interval funds and tender offer funds in the alternative-credit space, and how having the benchmark should help investors as they look at adding private credit and other alternatives to their portfolios. Flynn says the new index — which is not currently investable, so it is not the basis for a fund — is a sister to a broad interval fund index the firm introduced last year, both reflecting the growth in interval funds and in advisers' interest in adding them to c...

John Cole Scott, President of CEF Advisors, reviews the forecasts he made a year ago for 2025, grading his wins and losses on everything from inflation levels and Treasury yields to discount levels and the outcome in various sectors of the closed-end fund industry. Scott, the chairman of the Active Investment Company Alliance, also reviews the five funds he identified as buys for 2025 and how they turned out.

John Cole Scott, President of CEF Advisors, climbs his mountain of data to get a great view on the year ahead, and he's forecasting no recession, lower inflation and modest GDP growth for 2026, with less volatility coming from the rate picture but more market tension due to the global macro picture. Scott, who also serves as chairman of the Active Investment Company Alliance, also discusses what he sees happening in the closed-end fund industry, from the growth he expects to see in assets to the activism picture, down to what he foresees in leverage, return of capital and more...

Richard Stone, Chief Executive Officer for The Association of Investment Companies (the British equivalent to the Active Investment Company Alliance), discusses differences in the activist investor cultures in the United States and Great Britain, noting that the British model is more about engagement with the board and a collaborative effort to improve the business, while the U.S. model has shifted towards an entrenched fight to make change and capture opportunities. With Saba Capital emerging as the leading activist on both sides of the pond, Stone discusses how he sees activism continuing to change. In addition, he discusses how...

Bryce Doty, senior portfolio manager at Sit Investment Associates, says that "every time a new Fed chair comes in, they do something dumb," and with Jerome Powell on his way out as the chairman of the Federal Reserve, he expects some chaos that will create opportunities, potentially as soon as the next chairman of the central bank is announced. "The interpretation — and mis-interpretation — of what's going to happen is going to be crazy," Doty says, but that "complete mess" should create opportunity that turns out well for investors who ride it out and who "don't expect logic and reason to r...

Long-time activist investor Phil Goldstein of Bulldog Investors sat down with NAVigator host Chuck Jaffe at the Active Investment Company Alliance Fall Roundtable in New York City on Nov. 19 to discuss the current state of shareholder activism and why there seems to be so much less of it than there was just a few years back. While there have been moves and regulations that have made it harder for activist moves to succeed, Goldstein also says that there has been better fund management, resulting in less opportunity/need for activists to get involved.

John Cole Scott, President of CEF Advisors, looks at tax-loss selling season and whether it has started yet, noting that a few asset classes have largely been able to avoid situations where there will be widespread harvesting this year, while others (most notably business-development companies) may be poised for a lot of tax-driven reshuffling before year's end. Scott, who is the chairman of the Active Investment Company Alliance, also answers some questions on the value of tax-loss harvesting if it means selling a fund you like, and how he recognizes yield traps and spots big discounts that are poor...