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How Municipal Bond Dividend Cuts Impact NAV Performance and Investor Sentiment

ImageLast year, we penned an article about why we thought Municipal bond CEFs were about to suffer numerous and painful distribution cuts. The key data that suggested the cuts to our firm was a downward move in average Relative UNII from +23% to -18% in only seven months. For more detail, you can read the article on our blog ( under the December 2012 section.

What is UNII? Undistributed Net Investment Income is a balance sheet item for a closed-end fund that helps account for retained or overpaid income distributions. Relative UNII is calculated as the funds UNII balance divided into the amount of one-year income-only yield. We have used this data point to normalize our UNII analysis for the past 6 years. We believe it allows for better fund-to-fund comparisons. Our firm’s primary research is based on comparing various data on CEFs to peer-group data and to themselves over time. In fact, UNII was the data point we wanted access to when we originally contracted with Fundamental Data to source our CEF Universe report in early 2008 though they were acquired by Morningstar later that year. We have been self-sourcing the data internally at the firm since May of 2012. Read more…

Return of capital (ROC) may be a concern if it’s “destructive.” John Cole Scott of CEF Advisors shares a view on ROC supported by recent research.

ImageDestructive Return of Capital explained for closed-end fund investing. Investius interviews John Cole Scott on the topic at a recent industry conference.

The mission of Investius is to help investors and advisors sharpen their game, and make better informed decisions, by focusing on potentially overlooked ideas and strategies.

NexPoint Credit Strategies Fund (NHF) Interview with Brian Mitts, Chief Operating Officer of NexPoint Advisors

ImageWe interviewed Brian Mitts via telephone on November 22, 2013 in order to gain a better understanding of NHF and why it was challenging for our firm to compare it to other closed-end funds that we track for our weekly Universe data service and for client accounts. Brian is not the named portfolio manager, James Dondero, but we think you will see from the interview that Brian is well aware of the Fund’s focus and involved in the investment process in a deep and meaningful way.

Highland Capital Management, headquartered in Dallas, TX, is a SEC-registered investment advisor with 17 funds under management. According to their website, the Firm is one of the most respected and experienced alternative investment managers serving the registered product market. As a manager of managers, we are dedicated to identifying and retaining best in class asset managers to serve as sub-advisers to our funds.

Highland Capital’s fund platform includes a diverse set of investment strategies—from broad-based equity and fixed income investments to alternative strategies including long/short and alternative credit strategies. They have only one closed-end fund, NexPoint Credit Strategies Fund (NYSE: NHF).

JCS: Good afternoon Brian. From my notes we have a lot of ground to cover. I would like to get started. Why did you IPO NHF, what was the initial strategy? How often do people talk about the IPO price vs. the current price?

Read more…

WEBINAR REPLAY: CEF Advisor’s 4th Quarter 2013 CEF Review and 2014 Outlook

ImageOn January 8th, 2014 Closed-End Fund Advisors, Inc held it’s quarterly closed-end fund research call, data review and 2014 outlook. Below is a copy of the PDFed slides and a WMV replay of the entire session. The replay file is approximately 81MB and may take a while to load or download in your web-browser. We find it helpful to have the most recent version or you web browser and a fast internet connection.  (Generally in our experience, Internet Explorer buffers and plays the file while downloading and Chrome and Firefox download the entire file before it may be viewed).
Free CEF Data/Research Links:
**NEW** CEFAnalyzer LLC:

The Closed-End Fund Association:

CEF Connect (Nuveen Sponsored):

Morningtar’s CEF Site:

Investment Company Institute:

CEFNetwork (Pristine Advisers):

CEF Insight (Activist Info from AST Fund Solutions):

Capital Link’s CEF Portal:

Morningstar Discussion Board (77K+posts since 1998):

The CEF Network on LinkedIN (1130+Members):

Seeking Alpha:

CFA Naples Closed-End Fund Boot Camp KeyNote – Slides, Audio and Transcritpion


Last week, on December 10th, John Cole Scott, Portfolio Manager and EVP at Closed-End Fund Advisors gave a timely introduction and overview on closed-end funds to The CFA Society of Naples. CFA stands for Charter Financial Analysts and most major cities have a CFA chapter to provide educational

and networking opportunities for members.

As many of our contacts were not able to attend the session in Naples, we wanted to share the Slides in PDF format, link to the WMA audio file and a rough transcription of the session. 


Slides from CFA Event in Naples, FL
Audio File (Fast forward to 7 min)

Rough Transcription From Presentation  

CLOSED-END FUND ADVISORS LAUNCHES MONTHLY BEST IDEAS LIST — Research Support Focused on Breakaway Brokers and Independent RIA Firms

Richmond, VA, November 20, 2013 – Closed-End Fund Advisors (“CEFA”) now offers a monthly “Best Ideas List” covering closed-end funds. The service is in addition to the firm’s already established research related services; a “Daily CEF News Alert” email and “CEFA’s Closed-End Fund Universe”, a weekly collection of fundamental and technical data on all US listed Closed-End Funds (“CEF”) with a XLS file containing 120 data points and two PDF files. One PDF contains summary charts and one has individual fund data, peer-group data and 42 preset screens. The launch of CEFA’s Best Ideas List builds to their position as one of the top providers of US listed CEF data.

CEFA focuses its analysis on three factors: 1. NAV or the manager’s total return, 2. Dividend confidence or sustainability and 3. Relative pricing for the fund, or what CEFA believes to be a “good” discount to NAV. They pay attention to liquidity when selecting funds and generally look for CEFs that trade at least $500K per day. This allows for about 62% of all CEFs to be considered. In addition, before a fund can make the list, CEFA conducts manager, fund sponsor and board due diligence.

The service will cover 35-45 funds: 5 US Equity Funds, 6 Non US Equity Funds, 6 Specialty Equity (Sector) Funds, 6 Taxable Bond Funds, 6 National Municipal Bond Funds, 5 New York State Municipal Funds, Top Activist Targets, January Effect / Tax Loss Selling Targets in the November & December issues. This equals approximately 5%-7% of available US listed CEFs.

“We developed this service to fill a void in the CEF sector. Many advisors don’t have access to research from CEF analysts, need more guidance and summarization of our weekly data and wanted more focused help in working with their clients” says founder, John Cole Scott.

The service’s cost is $645 per quarter or $2,065 annually. CEFA limits access to 50 subscribers in order to reduce the market impact of the list. There isn’t a trial, but if requested, the layout of the report is available and CEFA offers pro-rated refunds on all of their services.

CEFA is an investment advisory firm that has specialized in CEF research and trading for almost 25 years. The firm publishes The Scott Letter: Closed-End Fund Report, a free newsletter containing in-depth CEF manager interviews. The firm offers managed accounts on a discretionary basis as well as research related services. They can also work as a one-time or ongoing fractional CEF analyst or as a sub-advisor for investment professionals. They hold a live quarterly research call on the CEF sector with recent trends and their outlook for next quarter. The sessions are archived at for replay.


If you would like more info on this topic, or to schedule an interview with John Cole Scott, please call Jennifer Campbell at (804) 381-4001 or email Jennifer at

CEF Advisor’s Quarterly CEF Research Call and Out Look Replay Available

CEF Advisors Third Quarter 2013 Review and Fourth Quarter 2013 Outlook for the Closed-End Fund Universe
October 9, 2013 – 4:30PM EST – 86 Minutes
Slides in PDF Format:
Unedited Rough Transcription:



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