quarterly closed-end fund & bdc review and outlook9/1/2017. bdc debt - total return. september...

QUARTERLY CLOSED-END FUND& BDC REVIEW AND OUTLOOK

John Cole Scott, CFS

Chief Investment OfficerClosed-End Fund Advisors, Inc.

3rd Quarter 2017 Review & 4th Quarter 2017 Outlook

Intermediate/Advanced CEF Skill Level

October 10, 2017

Closed-End Fund Advisors is a Registered Investment Advisory Firm Specializing in Closed-End Fund & BDC Research, Trading and Management Founded in 1989.

What Is CEF Advisors?• Investment Management, Research & Data• Independent, Fee Only & Family Owned • “Scott Letter: Closed-End Fund Report”• Discretionary Portfolio Management (SMA),

Unit Investment Trust (UIT) & Model Portfolios • CEF & BDC News/SEC Alert & “CEFA’s Closed-End

Fund Universe” Report (w/ BDCs). • Consulting with Institutional Investors and CEF Fund Sponsors • CEFData.com: CEF/BDC Web Modules Daily Data: Est $1K- $4K

per quarter based on classification (Indv, RIA or FA / Fund Sponsor)

Specializing in CEF/BDC Research, Trading & Portfolio Management

www.CEFadvisors.comFounded in 1989

http://www.cefadvisors.com/

What is a Closed-End Fund (CEF) / Business Development Company (BDC) ?

www.CEFadvisors.com 3

o 1940 Act Investment Company with Fixed-Capital, Active Management, and Daily Liquidity

o CEFs have traded on The NYSE since 1893o Tax-advantaged and earnings are passed through to

investors in the form of dividends and distributions (similar to REITs and MLPs)

o CEFs can have debt and preferred shares as leverages o BDCs Limited to 200% asset coverage (total assets /

total debt) or “one turn” of leverage, excluding SBIC facilities (BDCs). Higher fee structure w/ carry

o The closed-end structure is not an asset class but an investment vehicle “wrapper”

o BDCs were created by Congress in 1980 to provide an opportunity for individual non-accredited investors to participate in private investments

o BDCs are closed-end funds that provide small, growing companies access to capitalo BDCs are Domestically focused. Required to offer companies ‘managerial assistance’


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9/1/2007 9/1/2008 9/1/2009 9/1/2010 9/1/2011 9/1/2012 9/1/2013 9/1/2014 9/1/2015 9/1/2016 9/1/2017

Trad CEF - Total ReturnSeptember 30, 2007 - September 30, 2017

NAV TR Price TR

Back-tested results also do not account for those Funds that were previously recommended by the Adviser and which are no longer included as an alternative in a client's asset allocation strategy. Thus, the back-tested performance results shown above may overestimate the potential returns a client could expect to generate due to the effect of recommended manager survivor bias.


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9/1/2007 9/1/2008 9/1/2009 9/1/2010 9/1/2011 9/1/2012 9/1/2013 9/1/2014 9/1/2015 9/1/2016 9/1/2017

Trad CEF - Average Discount / PremiumSeptember 30, 2007 - September 30, 2017


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9/1/2007 9/1/2008 9/1/2009 9/1/2010 9/1/2011 9/1/2012 9/1/2013 9/1/2014 9/1/2015 9/1/2016 9/1/2017

BDC Debt - Total ReturnSeptember 30, 2007 - September 30, 2017

NAV TR Price TR



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9/1/2007 9/1/2008 9/1/2009 9/1/2010 9/1/2011 9/1/2012 9/1/2013 9/1/2014 9/1/2015 9/1/2016 9/1/2017

BDC Debt - Average Discount / PremiumSeptember 30, 2007 - September 30, 2017

12

1. First Lien Loans: 54%2. Second Lien Loans: 19%3. Unsecured Loans: 10%4. Equity/Other: 17%

www.CEFadvisors.com

Types of Loans Held By BDCs

Avg Portfolio Turnover: 37.2% Avg Variable Loans: 74% / Fixed: 26% Libor Floors: 41% at 1% Avg Level Avg Loan Size: $9.6M 73% of Loans Under $25MM Average Maturity 4.1 with a range of 2 Years to 6 years Avg No of Loans: 131 from 103 Companies

Source: Data as of September 29, 2017 from CEFData.com


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9/1/2007 9/1/2008 9/1/2009 9/1/2010 9/1/2011 9/1/2012 9/1/2013 9/1/2014 9/1/2015 9/1/2016 9/1/2017

Municipal Bonds - Total ReturnSeptember 30, 2007 - September 30, 2017

NAV TR Price TR



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9/1/2007 9/1/2008 9/1/2009 9/1/2010 9/1/2011 9/1/2012 9/1/2013 9/1/2014 9/1/2015 9/1/2016 9/1/2017

Municipal Bonds - Average Discount / PremiumSeptember 30, 2007 - September 30, 2017

Municipal Bond Closed-End Fund Universe

Source: Data as of September 29, 2017 from CEFA’s Universe Data15

Note: Volatility is a one year rolling calculation

National

Muni FundsSingle State Muni Funds

Total

Number of Funds 90 81 171Net Assets (Total) $47,630 $18,545 $66,175Net Assets $529 $229 $387Earnings Coverage Ratio % 99.9 100.4 100.1Premium / Discount % -2.32 -3.76 -3.00Total Mkt Yield % 5.01 4.44 4.74Leverage Adj NAV Yield % 3.72 3.20 3.48NAV Volatility 4.15 3.98 4.07Leverage % 31.4 33.6 32.4Leverage Cost % 0.72 0.89 0.80Duration 8.78 9.49 9.11Insured % 13.2 17.1 15.0Investment Grade % 85 91 88Credit Quality A A A

Municipal Bond Closed-End Fund Universe

Source: Data as of September 29, 2017 from CEFA’s Universe Data16

Tax Equivalent Yield ComparisonMarried Couple with W-2 Income of $1MM+

Sources: CEFA’s Universe Data as of 9/29/2017 and tax rates from IRS and NY State.

17


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9/1/2007 9/1/2008 9/1/2009 9/1/2010 9/1/2011 9/1/2012 9/1/2013 9/1/2014 9/1/2015 9/1/2016 9/1/2017

MLP - Total ReturnSeptember 30, 2007 - September 30, 2017

NAV TR Price TR



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9/1/2007 9/1/2008 9/1/2009 9/1/2010 9/1/2011 9/1/2012 9/1/2013 9/1/2014 9/1/2015 9/1/2016 9/1/2017

MLP - Average Discount / PremiumSeptember 30, 2007 - September 30, 2017

20

Broad Investable UniverseAssets of Closed-End Funds/BDCs* by type , a s of Se p te m be r 29 , 2017

$279.4 Billion x 4.0% = ~$11 Billionin total CEF assets average discount exploitable undervaluation

# of FundsTotal Net

As s ets

P r em ium /

Dis count

Mar ket

YieldBeta Dur at ion Lever age

Non Lev

Expens e

Rat io

Aver age

Net As s ets

Equity Funds 21 2 $ 1 1 3 ,8 1 3 -4 .7 2% 6.7 1 % 1 .0 0 1 4 .0 5 % 1 .4 8 $ 5 3 7

Taxable Bond 1 4 6 $ 65 ,91 9 -2.5 4 % 7 .27 % 0 .29 3 .6 25 .67 % 1 .4 1 $ 4 5 1

Municipal Bond 1 7 1 $ 66,1 7 5 -3 .0 0 % 4 .7 4 % -0 .0 7 9.1 3 2.4 4 % 1 .0 1 $ 3 8 7

BDCs 5 0 $ 3 3 ,4 5 5 -9.0 0 % 8 .8 0 % 0 .8 3 3 7 .5 4 % 5 .93 $ 669

Tota l CEFs 5 7 9 $ 2 7 9,3 61 -4 .0 3 % 6.4 5 % 0 .4 9 6.8 2 4 .4 4 % 1.7 1 $ 4 8 2

Nat ional Muni Bond 90 $47,630 -2.32% 5.01% -0.06 8.8 31.39% 0.93 $529

De bt Focus e d BDC 4 5 $32,757 -5.86% 9.66% 0.88 39.26% 5.84 $728

Cove r e d Call 29 $20,286 -2.87% 8.15% 0.82 2.85% 1.14 $700

US Stock 29 $20,390 -7.83% 6.28% 0.96 11.19% 1.62 $703

MLP Funds 27 $13,915 -1.74% 9.69% 2.17 29.09% 1.87 $515

High Yie ld Bond 3 5 $13,036 -4.09% 7.25% 0.37 3.5 22.95% 1.22 $372

Wor ld S tock 5 6 $14,187 -7.87% 4.23% 0.97 6.11% 1.54 $253

Se nior Loan 26 $11,662 -4.44% 6.31% 0.15 1.2 33.20% 1.62 $449

Pr e fe r r e d Equity 1 6 $10,969 0.69% 7.06% 0.23 5.4 31.10% 1.24 $686

REIT Funds 1 0 $6,065 -7.88% 7.89% 0.74 21.12% 1.45 $606

Conve r t ible Bond 1 1 $4,302 -2.11% 8.74% 0.80 3.1 28.70% 1.47 $391

Inve s tm e nt Gr ade Bond 1 3 $4,113 -0.61% 5.83% 0.18 5.5 17.89% 0.90 $316

CEF Universe Update

www.CEFadvisors.com21

Source: CEFAData.com

Fund GroupingDiscount / Premium Last Q NAV TR Last Q Price TR

Discount Premium Positive Negative Positive Negative

Equity Traditional CEFs 169(80%)

43(20%)

190(90%)

22(10%)

177(83%)

35(17%)

Taxable BondTraditional CEFs

109(75%)

37(25%)

146(100%)

0(0%)

129(88%)

17(12%)

Municipal BondTraditional CEFs

125(73%)

46(27%)

171(100%)

0(0%)

147(86%)

24(14%)

BDCs 34(68%)

16(32%)

38(76%)

11(22%)

32(64%)

18(36%)

ALL CEFs 437(75%)

142(25%)

545(94%)

33(6%)

485(84%)

94(17%)

Data as of September 29, 2017For BDC funds, we show 2Q17 NAV TR, as 9/29/2017 NAV hasn’t been disclosed yet

Current Closed-End Discounts


Source: CEFData.com

US Equity -7.83

Non US Equity -7.87

Special Equity -2.54

Taxable Bond -2.54

Nat Muni Bond -2.32

State Muni Bond -3.76

BDC Debt Focused -5.86

BDC Equity Focused -37.24

-45 %

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-35 %

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-25 %

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-15 %

-10 %

-5 %

0 %

5 %

Aver

age

CEF

Disc

ount

Avg CEF Discount % as of September 29, 2017

Closed-End Discount TrendsTraditional & BDC


Source: CEFData.com

2Q Ended with an average CEF Discount of -4.03%

10 Year Average Discount: -4.91%

Q2-12

Q3-12

Q4-12

Q1-13

Q2-13

Q3-13

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Q2-17

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10.00

Main Peer Groups - Average CEF DiscountMay 11, 2012 - September 29, 2017

All Trad CEFs All BDC CEFs Av All Trad CEFs Av All BDC CEFs

Closed-End Discount Trends


Source: CEFData.com

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Q1-17

Q2-17

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- Average CEF DiscountMay 11, 2012 - September 29, 2017

US Equity Non US Equity Special Equity Taxable Bond

Nat Muni Bond State Muni Bond BDC Debt Focused BDC Equity Focused

CEF Volume Trends – 3Q 2017

www.CEFadvisors.com 25Source: CEFAData.com

Fund Grouping Avg VolLast Q

Avg VolPrev Q

Volume Trend

US Equity Funds 125,653 122,950 2%Non-US Equity Funds 51,600 58,336 -12%

Specialty Equity Funds 125,576 133,310 -6%Ave Traditional Equity CEF 103,895 109,984 -6%

Taxable Bond Funds 110,672 111,971 -1%National Muni Bond Funds 66,924 66,584 1%

State Muni Bond Funds 24,004 24,187 -1%Ave Traditional Bond CEF 76,106 76,766 -1%Average Traditional CEF 87,243 90,165 -3%

Debt Focused BDC Funds 278,162 304,856 -9%Equity Focused BDC Funds 34,539 28,500 21%

Average BDC 253,800 277,220 -8%Average For ALL CEFs 101,626 106,208 -4%

Data as of September 29, 2016

26

6.9%

12.4%

18.8%

24.7%

25.9%

8.1%

2.4% 0.7%

under $100$100 - $250$250 - $500$500 - $1,000$1,000 - $2,500$2,500 - $5,000$5,000 - $10,000$10,000 +

Note: 579 closed-end funds; data as of 9/29/17, Source: CEFData.com


CEF/BDC Yield Comparison

Data as of 9/29/2017.MLP Index: Alerian MLP Index; REIT Index: Wilshire US REIT Index; Corporate Debt Index: S&P 500 Bond IndexUS High Yield Indices : BofA Merrill Lynch US High Yield (BB Rated, B Rated, CCC and Lower Rated )

8.7%

9.7% 9.7%

7.9%8.2%

7.3%

6.3%

7.1%

6.3%5.8%

4.7%4.2%

7.7%

3.7%3.1%

4.1%

5.5%

10.3%

6.6% 6.4%

7.4%

6.1%

7.7%

5.7% 5.5% 5.4%

4.6%4.9%

3.5%3.7%

0%

2%

4%

6%

8%

10%

12%

28

15.2%

34.2%

22.5%

19.2%

6.7%2.2%Yield Under 4%Yield 4%-6%Yield 6%-8%Yield 8% -10%Yield 10% -12%Yield Over 12%

Note: 579 CEFs; data as of 9/29/2017 , cefdata.com

Relative UNII for Traditional CEF Municipal Bond Funds

www.CEFadvisors.com 29Source: CEFData.com

Q2-12

Q3-12

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25 %

30 %

Nat Muni Bond - Relative UNIIMay 11, 2012 - September 29, 2017

Nat Muni Bond Av Nat Muni Bond

Return of Capital (90 Day) For CEFs


Source: CEFData.com

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Main Peer Groups - Historical ROCMay 11, 2012 - September 29, 2017

US Equity Non US Equity Special Equity Taxable Bond

Nat Muni Bond State Muni Bond BDC Debt Focused BDC Equity Focused

Destructive Return of Capital (1YR DRoC)(Traditional)


Source: CEFA’s Closed-End Fund Universe 6/30/2015 (www.cefuniverse.com)

Fund Grouping # Funds with Destructive

RoC

% Funds with Destructive

RoC

Average Destructive

RoC %

1Yr NAV TR vs NAV

Yield

3Yr NAV TR vs NAV

Yield

US Equity Funds 2 7% 4% 160% -8%Non-US Equity Funds

4 7% 15% 330% 12%Specialty Equity

Funds 50 44% 49% -92% -87%Equity CEF 61 29% 42% 72% -57%

Taxable Bond Funds22 15% 19% 41% -35%

National Muni Bond Funds 8 9% 2% -91% 2%

State Muni Bond Funds 4 5% 4% -105% 3%

Bond CEF 34 11% 13% -21% -19%Average CEF 95 18% 32% 20% -35%

*Whitepaper

Closed-End FundMarket Price volatility vs. NAV volatility (1 Year)


Source: September 29, 2017 – CEFData.com

0.0 5.0 10.0 15.0 20.0 25.0 30.0

U.S. Equity Funds

Non U.S. Equity Funds

Specialty Equity Funds

Taxable Bond Funds

National Muni Bond

Single State Muni Bond

Debt Focused BDC

Equity Focused BDC

Price Volatility NAV Volatility

CEF Press Release SEC Filings Summary(2396 CEF PRs in 3Q17)

www.CEFadvisors.com 33Source: Fund Press Releases / SEC Filings.

Announcement Type 3Q 2017 2016 2015 2014 Avg per Q since 2014

Rights Issue / Offering 5 9 6 9 2

Secondary Offering (Trad CEF) 0 6 2 4 1

Secondary Offering (BDCs) 1 4 16 16 4

Tender Offer 17 17 15 16 6

Distribution Policy Change(TradCEF) 5 6 11 19 3

Distribution Policy Change (BDCs) 0 0 1 1 0

13 Filings (Trad CEF) 65 897 906 - 231

New N-2 Filings 84 97 52 31 21

Updated N-2 Filings 120 120 104 52 31

Investment Manager / Advisor Change 5 35 5 20 5

Portfolio Manager Change 3 39 45 60 13

Leverage Amount / Type Change 34 105 52 47 18

CEF & BDCDividend Increases vs. Decreases


Source: Fund Press Releases

Dividend Announcement

3Q 2017Number of

Announcements

3Q 2017Average Change

3Q ‘16 – 2Q ‘17Number of

Announcements

3Q ‘16 – 2Q ‘17Average Change

Dividend Maintains 1183(89.1%) N/A 4835 (89.4%) N/A

Dividend Increases 42 (3.2%) +4.24% 175 (3.2%) +5.56%

Dividend Decreases 102 (7.7%) -5.89% 398 (7.4%) -9.58%

Under 5% Increase 29 (69%) +1.65% 117 (67%) +1.70%

Over 5% Increase 13 (31%) +10.03% 58 (33%) +13.36%

Under 5% Decrease 47 (46%) -1.82% 157 (39%) -2.62%

Over 5% Decrease 55 (54%) -9.38% 241 (61%) -14.12%

4% of announcements “Big Cuts”

3Q 2017 Closed-End FundDividend Increases vs. Decreases



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U.S. EquityFunds

Non U.S.Equity Funds

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Taxable BondFunds

National MuniBond Funds

Single StateMuni Bond

Funds

Debt FocusedBDC

EquityFocused BDC

Major CEF Groups: Number of dividend decreases / increasesLast Quarter & Previous 1 Year Rolling

Last Q Decreases

Previous 1 Yr Rolling Decreases

Last Q Increases

Previous 1 Yr Rolling Increases

CEF Recent Dividend Changes(Policies NOT Promises)


Source: CEFAData.com, as of Sep 29, 2017

3 Year Dividend Growth• 303 Funds (60%) had negative 3 year growth averaging -19.9%• 73 Funds (14%) had positive 3 year growth averaging +18%

2 Year Lookback -- 360 Funds changed their dividend policy in the past 2 years (68% of funds)• 288 Cut (80%) an average of -11% while 72 (20%) increased an average of +8%

• 180 of these funds have “level” or “managed distributions”• 144 of those were cut an average -9%• 36 were increased an average of +7%

1 Year Lookback • 54 increase vs. 202 decreases. 50 Funds had BOTH increases and decreases in the

past year.

CEF & BDCHistorical IPOs (3Q 17)


Source: SEC Filings, Press Releases

YTD 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

Number of IPOs 8 8 9 15 29 28 26 22 14 3 45

Average Assets

In $ millions$242 $225 $272 $511 $511 $442 $258 $371 $192 $134 $629

Total New CEF IPO

Assets in $ Billions

$1.9B $1.8B $2.4B $7.7B $14.8B $12.4B $6.7B $8.2B $2.7B $.4B $28.3B

10 Year Average: 19 Funds per year, $350MM Ave Fund, $8.5 Billion Per Year

8 10

54 5

5

2

3 23

2 21

23

2 32

3

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

1Q'15

2Q'15

3Q'15

4Q'15

1Q'16

2Q'16

3Q'16

4Q'16

1Q'17

2Q'17

3Q'17

CEF & BDCHistorical IPOs (3Q 17)


Source: September 29, 2017 - CEFData.com

Inception Assets (M) | # funds

39

$763

$608$390

$216

$210$163

$130 Debt Focused BDC

Loan Participation

High Yield Bond Funds

Mortgage Bond Funds

Global Income Funds

Prefered Equity Leveraged

Emerging Market Income

Note: Inception Assets in millions ; data as of 9/29/2017 , cefdata.com

2017 IPO Details3Q 2017


EV Flt-Rt 2022 Tgt Trm Tr (EFL) – Taxable Bond Funds -IPOed on July 27, 2017

IPO Price: $10.00 IPO Assets: $210MPrice as of 9/29/17: $9.95 Disc/Prm as of 9/29/17 : +1.32%

Nuv Emg Mrkts Debt 2022 Trg (JEMD) – Taxable Bond Funds -IPOed on September 26, 2017

IPO Price: $10.00 IPO Assets: $130MPrice as of 9/29/17 : $10.04 Disc/Prm as of 9/29/17 : +2.14%

XAI Octagon FR & Alt Inc Term (XFLT) – Taxable Bond Funds -IPOed on September 27, 2017

IPO Price: $10.00 IPO Assets: $72.5MPrice as of 9/29/17 : $10.70 Disc/Prm as of 9/29/17 : +9.74%


IPOs during 4Q 2016 – 2Q 2017Current Discount / Premium


Data as of September 29, 2017 Source: CEFAData.com

IPO Date Ticker Fund Name Type Current Disc/Prm Current Price IPO Price Curr vs IPOIHIT Invsc Hi Incm 2023 Tgt Trm Fd Traditional 0.30% $10.12 $10.00 101.20%FIV FT Sr Flt Rt 2022 Tgt Trm Fd Traditional -0.92% $9.69 $10.00 96.90%JPT Nuv Pref & Incm 2022 Trm Fd Traditional 0.00% $25.49 $25.00 101.96%

BGIO 2022 Glbl Incm Opp Tr Traditional 0.20% $10.05 $10.00 100.50%JCO Nuveen Cr Opp 2022 Tgt Trm Fd Traditional -1.01% $9.85 $10.00 98.50%CBH AG Convt & Incm 2024 Tgt Trm Traditional 1.02% $9.95 $10.00 99.50%

CGBD TCG BDC BDC 3.75% $18.82 $18.27 103.01%

4Q 2016

1Q 2017

2Q 2017

Closed-End Fund Mergers


Source: Fund Press ReleasesReasons to Merge: 1. Reduce expense ratio 2. Increase liquidity 3. Reduce bid/ask spread 4. Improve cost of future leverage

Avg. – 18 per year36 Last 5 Yrs, 10 previous 7 Yrs

0

10

20

30

40

50

60

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Num

ber o

f Clo

sed

-End

Fun

dsClosed-End Funds Merged into Other Closed-End Funds (September 2017)

Closed-End Fund Deaths



Causes: Open-ending, liquidation & conversion. (8.8 per year on average)

0

2

4

6

8

10

12

14

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

CEF Funds Open-Ended, Liquidated or Converted to ETF

Converted to ETF

Liquidated

Open-ended

Traditional Closed-End Fund90 Day NAV – Market Price Correlation


Source: September 29, 2017 - CEFData.com

Q2-12

Q3-12

Q4-12

Q1-13

Q2-13

Q3-13

Q4-13

Q1-14

Q2-14

Q3-14

Q4-14

Q1-15

Q2-15

Q3-15

Q4-15

Q1-16

Q2-16

Q3-16

Q4-16

Q1-17

Q2-17

-20

0

20

40

60

80

100

120

Trad CEFs Groups - 90 Day NAV/Price CorrelationJune 22, 2012 - September 29, 2017

All Trad CEFs All Equity All Bond US Equity Non US Equity

Special Equity Taxable Bond Nat Muni Bond State Muni Bond

Traditional Closed-End FundNAV – Market Price Correlation



Fund Grouping Correlation 3Q 17

Correlation 2Q 17

Correlation Trend

US Equity Funds 69.73% 78.71% -8.98%

Non-US Equity Funds 81.09% 86.50% -5.41%

Specialty Equity Funds 74.89% 79.97% -5.08%Ave Equity CEF 75.24% 81.06% -5.82%

Taxable Bond Funds 52.73% 62.13% -9.40%

National Muni Bond Funds 48.15% 67.50% -19.35%

State Muni Bond Funds 42.53% 59.05% -16.52%Ave Bond CEF 48.81% 62.87% -14.06%Average CEF 59.42% 70.21% -10.79%

Data as of September 29, 2017

CEF / BDC Index Performance

www.CEFadvisors.com 47Source: CEFAData.com

Fund Grouping 3Q 2017NAV

3Q 2017Mkt Pr

1 Year NAV

1 YearMkt Pr

5 YearNAV

5 Year Mkt Pr

12 Major Sectors Index 2.3% 2.5% 9.9% 13.3% 7.9% 7.6%High Income Index 2.6% 2.9% 11.4% 16.0% 6.5% 6.2%

Tax-Sensitive Income Index 1.4% 1.7% 4.7% 6.7% 3.5% 3.1%60/40 Balanced Index 3.5% 4.1% 13.8% 18.9% 8.5% 8.7%

Global Equity Index 4.7% 5.6% 19.1% 26.1% 9.7% 10.7%Equity Income Index 3.6% 4.2% 13.0% 19.0% 7.7% 8.4%

Taxable Bond and BDC 2.6% 2.4% 9.4% 11.6% 6.4% 5.6%National Municipal Bond 1.9% 1.9% 0.7% -0.9% 5.1% 3.7%

Preferred Equity Index 1.6% 1.7% 10.5% 12.6% 9.6% 9.1%Convertible Bond Index 3.0% 3.8% 12.9% 20.0% 7.5% 7.5%High Yield Bond Index 2.3% 3.6% 11.1% 12.8% 6.9% 4.3%

Sr. Loan Index 1.3% 1.1% 7.5% 10.7% 5.5% 4.4%MLP Index -0.9% -1.1% -1.8% 2.0% -1.3% -2.2%

REIT / Real Asset Index 2.0% 3.5% 5.3% 10.8% 9.5% 9.4%Debt-BDCs Index 2.4% 0.7% 10.5% 12.3% 8.8% 8.1%

Data as of September 29, 2017, Annualized over 1 year


CEF Institutional Holdings(Traditional CEFs 3Q 17)

Source: CEFData.com

InstitutionalHoldings Trends

Increase: 212 fundsDecrease: 295 funds

Q1-13

Q2-13

Q3-13

Q4-13

Q1-14

Q2-14

Q3-14

Q4-14

Q1-15

Q2-15

Q3-15

Q4-15

Q1-16

Q2-16

Q3-16

Q4-16

Q1-17

Q2-17

0.0 %

5.0 %

10.0 %

15.0 %

20.0 %

25.0 %

30.0 %

35.0 %

40.0 %

45.0 %

Trad CEFs Groups - % Shares Owned by InstitutionsJanuary 18, 2013 - September 29, 2017




BDC Institutional OwnershipLa

rges

t Ins

titut

iona

l Hol

der (

%)

Note: Data as of 9/29/2017 , cefdata.com

BDC Shares Owned by Institutions (%)Approved Below NAV Offering (3Q)

0

5

10

15

20

25

30

0 10 20 30 40 50 60 70

CEF/BDC Activist / Institutional Investors



Activist: 1. Ancora Advisors2. Bull Dog Investors3. Special Opportunities Fund

(SPE -- Bulldog)4. City of London5. Ironsides Partners6. Karpus Investment Management7. Western Investment8. Elliott Associates (BDCs)9. Wynnefield Capital (BDCs)

Followers:1. Punch & Associates Investment

Management2. Relative Value Partners3. 1607 Capital Partners LLC4. Rivernorth Capital Management5. Saba Capital Management6. SIT Investment Associates7. DG Capital Management (BDCs)8. Sims Capital Management (BDCs)

Total Assets at work 12/31/16 - $1.5 Billion Activist // $6.5 Billion Followers & Activist

Closed-End Fund Corporate Actions / Activist Update

3Q 2017

www.CEFadvisors.com 51Source: SEC Filings, Press Releases

Month Filed

Filing Closed-End Fund/BDC Investor/Who Notes

Sep 13D/ABR Dbt Stgs Fd (DSU)

Saba 13.53%Discussion regarding trading

on discount

Sep 13D/A Lzrd Glbl Tot Rtn & Incm Fd (LGI) Bulldog Dec(5.31%)

Sep 13D/A China Fund (CHN) City of London 24.9%Investment Agrmnt

Termination - proposal

Sep 13G/A Fed Prmr Imd Muni Incm Fd (FPT) Karpus 8.69%Conversion from Active to

Passive

Sep Proxy Highland Floating Rate Opportunities Fund

Public Proposal of OEF to CEF conversion

Sep 13D/A Madison Stgc Sctr Prm Fd (MSP) Karpus 24.1%Fund reorganization of MSP

into MCN not approved


Closed-End Fund Corporate Actions / Activist Update



Month Filed

Filing Closed-End Fund/BDC Investor/Who Notes

August Tender AC Convt Sec & Incm Fd (AVK)AC Convt Sec & Incm Fd II (AGC)

Western Investement Up to 15% @ 98% of NAV

August 13D/A Abd Singapore Fd (SGF) Bulldog Inc (5.09%)Self-Tender proposition

August Repurchase

Boulder Growth & Incm Fd (BIF) Public @ Discount to NAV

July 13G Capitala Finance Corp (Preferred) Karpus 12.72% New

July 13D Clough Glbl Eq Fd (GLQ) Bulldog 6.34%Tender Offer

July 13G Oxford Lane Cap Corp (Preferred)

Karpus 19.12% New


CEF Activist Holdings(Traditional CEFs 3Q 17)

Source: CEFData.com

Activist Holdings Trends

Increase: 79 fundsDecrease: 99 funds

Q1-13

Q2-13

Q3-13

Q4-13

Q1-14

Q2-14

Q3-14

Q4-14

Q1-15

Q2-15

Q3-15

Q4-15

Q1-16

Q2-16

Q3-16

Q4-16

Q1-17

Q2-17

0.0 %

5.0 %

10.0 %

15.0 %

20.0 %

25.0 %

30.0 %

35.0 %

40.0 %

Trad CEFs Groups - % Shares Owned byActivistsJanuary 25, 2013 - September 29, 2017




Prem

ium

/ D

isco

unt (

%)

Note: Data as of 9/29/2017 , cefdata.com

Shares owned by Activists / Followers(%)

-25

-20

-15

-10

-5

0

5

10

15

5 15 25 35 45 55 65 75

55

$1,499

$1,094

$553

$376

$225$89 $31 Non U.S. Equity

BDCTaxable BondU.S. EquityHybrid / BalancedSpecialty EquityNational Muni Bond

Note: millions of dollars, data as of 9/29/2017, cefdata.com

BDC Debt $1,058Asian Equity $1,023General Equity $376US Government Bond $297Hybrid / Balanced $225

Top 5 Peer Groups

CEF Activist Ownership $3,866

56

$6,344

$4,345$3,802

$3,161

$1,534

$1,270

$578 $517 Taxable BondNon U.S. EquitySpecialty EquityBDCU.S. EquityNational Muni BondSingle State Muni BondHybrid / Balanced

Note: millions of dollars, data as of 9/29/2017, cefdata.com

BDC Debt $3,021Asian Equity $2,290High Yield Bond $1,482Covered Call $1,474General Equity $1,244

Top 5 Peer Groups

CEF Activist Ownership $21,550

CEFA’s Outlook for 4Q and 2018


• US Equity Funds• Non-US Equity Funds• Specialty Equity (Sector) Funds

• Taxable Bond Funds

• National Municipal Bond (Tax-Free) Funds• State Specific Municipal Bond (Tax-Free) Funds

• Debt-Focused Business Development Companies (BDCs)• Equity-Focused Business Development Companies (BDCs)

• Sustainable CEF Portfolio Distribution Yields, Beta, Correlations, Duration and After-Tax Income, Gross Asset Exposure, Leverage

Possible Trump Impact to BDCs and CEFs(Sectors / DOL / Trends and Products)



CEF / BDC - Sectors• Municipal Bond CEFs / QDI• MLP / Infrastructure• “Typical” Equity Funds• Duration Bonds/Preferred• Sr. Loans / BDCs

Products of BDCs/CEFs• Index Inclusion ?• Acquired Fund Fees• Banks competing with BDCs?• ETFs, CEFs, OEFs, A-ETFs

Market Trends• Taxes• Regulations• Market Risk• Interest Rates• Cost & Type of Leverage

DOL• CEF / BDC IPOs & Secondary’s • CEF Products – UITs in IRAs?• Pushed back – How far? Ever?• Fiduciary vs. Suitability• Kill or fix BDC/CEFs IPOs ?


Closed-End Funds & BDCs in a Rising Rate Environment

(March 2004 to September 2007)

Full article on our blog:

www.CEF-Blog.com

http://www.cef-blog.com/

CEFData.com

www.CEFadvisors.com60

CEFDATA.COM – Data Updates Daily and Live with Analysis Updates Free Public CEF/BDC Profiles & 33 CEF/BDC Indexes Watchlists, Models, Portfolio, Screener, PR/News ad SEC Filings Database

Show how portfolio/model changes with swaps or allocation changes View and Summary Reports

Fund Sponsor Modules Compare a Fund to Dynamic Peer Groups and Selected Peers

Expecting to add 1-2 modules per month: List on www.CEFdata.com

30 Day Free Trial and free CEFU/DA while in development with guaranteed renewals at 25% off through October 31, 2018 for Q Webinar Attendees (Promo code CEFD2017) that sign up by November 30, 2017.

Pricing per Quarter is $1K (Individual) $2K (Small RIA/FA) $3K Large RIA/Hedge Fund, $4K Fund Sponsor/Product Sponsor. We always offer prorated refunds and include 30 minutes per quarter free consulting time with John Cole Scott for paid subscribers.

http://www.cefdata.com/

CEF Advisors Links


• CEF Advisors’ Website: www.CEFadvisors.com• CEF/BDC Index Data: www.CEFdata.com/cefaindex• CEFA’s Blog: www.CEF-Blog.com /

CEF/BDC Research Sites: www.BDCUniverse.net -- www.CEFdata.com

• Published Articles• Seeking Alpha: http://seekingalpha.com/author/john-cole-scott/articles• WealthManagement.com: http://wealthmanagement.com/author/john-scott

• Vimeo Channel: https://vimeo.com/johncolescott/videos

• Weekly CEF Data (14 Day Trial), Daily News Alerts (10 Day Trial), www.CEFUniverse.com

• CEF Universe Data Definitions: http://www.cefadvisors.com/Download/CEFUDataDefinitions.pdf

• CEFA’s Form ADV Part 2A and 2Bhttp://www.cefadvisors.com/Download/ADV-II-Form.pdf


http://cefdata.com/cefaindex

http://www.cef-blog.com/

http://www.bdcuniverse.net/


http://seekingalpha.com/author/john-cole-scott/articles

http://wealthmanagement.com/author/john-scott

https://vimeo.com/johncolescott/videos

http://www.cefuniverse.com/

http://www.cefadvisors.com/Download/CEFUDataDefinitions.pdf

http://www.cefadvisors.com/Download/ADV-II-Form.pdf

62

For Your InformationCEF Resources

CEF/BDC Fund Profiles: www.cefdata.comCEFAnalyzer LLC: http://CEFanalyzer.comThe Closed-End Fund Association: www.Closed-EndFunds.comCEF Connect (Nuveen Sponsored): www.CEFconnect.comMorningtar's CEF Site:http://www.morningstar.com/Cover/CEF-Closed-End-Funds.aspxInvestment Company Institute: http://www.ici.org/research#fact_booksCEFNetwork (Pristine Advisers): www.CEFnetwork.comCEF Insight (Activist Info from AST Fund Solutions): www.CEFinsight.comCapital Link's CEF Portal: http://cef.capitallink.com/Morningstar Discussion Board:http://socialize.morningstar.com/NewSocialize/forums/100000006.aspxYahoo CEF Discussion Board: https://groups.yahoo.com/neo/groups/closedendfunds2/infoThe CEF Network on LinkedIN: www.CEF-Network.comSeeking Alpha: http://seekingalpha.com/articles?filters=closed-end-funds

More Useful Links at: www.cefadvisors.com/investRes.html


http://cefanalyzer.com/

http://r20.rs6.net/tn.jsp?e=001qvahwQeW7mn2S5P6C5isVZ1FhWYzeVe8k88j1peWE3O8iY584CD5auIqlutm5zU7feLnCFyoSBfkBCB5V69n0BZN6gc7VDT89QJeKCFWhsWq7vhHOTN2IQ==

http://r20.rs6.net/tn.jsp?e=001qvahwQeW7mn2S5P6C5isVZ1FhWYzeVe8k88j1peWE3O8iY584CD5auIqlutm5zU7feLnCFyoSBfkBCB5V69n0CvYHCOXw940Mkf2KfKvn51LCFqmRGVPGQ==

http://www.morningstar.com/Cover/CEF-Closed-End-Funds.aspx

http://www.ici.org/research#fact_books

http://r20.rs6.net/tn.jsp?e=001qvahwQeW7mn2S5P6C5isVZ1FhWYzeVe8k88j1peWE3O8iY584CD5auIqlutm5zU7feLnCFyoSBfkBCB5V69n0E5CwxCTE-f3ZzrFQLq2eykSTJFN8MxZTw==

http://www.cefinsight.com/

http://cef.capitallink.com/

http://socialize.morningstar.com/NewSocialize/forums/100000006.aspx

https://groups.yahoo.com/neo/groups/closedendfunds2/info

http://r20.rs6.net/tn.jsp?e=001qvahwQeW7mn2S5P6C5isVZ1FhWYzeVe8k88j1peWE3O8iY584CD5auIqlutm5zU7feLnCFyoSBfkBCB5V69n0HRSmnOWrOj1KI3y8ESlMGhFedJYCP9oYg==

http://seekingalpha.com/articles?filters=closed-end-funds

http://www.cefadvisors.com/investRes.html

View online: www.cefdata.com/portfoliocomp -- Disclosure: See full portfolio disclosures at the end of this presentation

http://www.cefdata.com/portfoliocomp

Current CEFA Portfolio Modes

www.CEFAdvisors.com

Disclosure: See full portfolio disclosures at the end of this presentation

67

Speaker’s Biography

John Cole Scott, CFSEXPERIENCECIO of Registered Investment Advisor Focused Exclusively on CEFs & BDCs since 2001

EDUCATIONCollege of William & MaryBachelor of Science in Psychology 2000

John Cole Scott, CFSChief Investment Officer of Closed-End Fund Advisors

Mr. Scott has worked at Closed-End Fund Advisors since 2001. He holds theFINRA 66 License and the Certified Fund Specialist designation (CFS). He is agraduate of The College of William and Mary and has been quoted andinterviewed widely in the financial press and presented at conferences and forinvestment groups on more than 50 occasions.

In 2008 John founded CEFA's Closed-End Fund Universe, a data servicecovering all US listed closed-end funds and BDCs. Currently supported by aninternal 9 member analyst team with a data manager/ programmer coveringthe 575+ ticker universe of CEFs/BDCs. They regularly do consulting andprojects for CEF/BDC Sponsors, Hedge Funds and Institutional Investors.

Portfolio Consultant with over a quarter billion deposits into a fund focused onBDCs with a fund sponsor partner. He developed 33 CEF/BDC based indexes; 9diversified portfolio objective, 9 Equity and 15 Bond sector. John is a pastboard member of The Richmond Association for Business Economics (RABE),and serves as Assistant Treasurer and on the Investment Committee for TheNew York State Society of The Cincinnati. Board member and Finance &Investment Committees for The William & Mary National Alumni Board.

www.CEFadvisors.com

Important: The information in this presentation is not for general circulation and should not be considered an offer, or solicitation, to deal in any of the mentioned funds. The information is provided on a general basis for information purposes only, and is not to be relied on as advice, as it does not take into account the investment objectives, financial situation or particular needs of any specific investor.

Any research or analysis used to derive, or in relation to, the information herein has been procured by Closed-End Fund Advisors (“CEFA”) for its own use, and may have been acted on for its own purpose. The information herein, including any opinions or forecasts have been obtained from or is based on sources believed by CEFA to be reliable, but CEFA does not warrant the accuracy, adequacy or completeness of the same, and expressly disclaims liability for any errors or omissions. As such, any person acting upon or in reliance of these materials does so entirely at his or her own risk. Any projections or other forward-looking statements regarding future events or performance of countries, markets or companies are not necessarily indicative of, and may differ from, actual events or results. No warranty whatsoever is given and no liability whatsoever is accepted by CEFA or its affiliates, for any loss, arising directly or indirectly, as a result of any action or omission made in reliance of any information, opinion or projection made in this presentation.

The information herein shall not be disclosed, used or disseminated, in whole or part, and shall not be reproduced, copied or made available to others without CEFA expressed written permission. CEFA reserves the right to make changes and corrections to the information, including any opinions or forecasts expressed herein at any time, without notice. Data comes from our CEF Universe service dated September 30, 2017 unless otherwise noted.


Closed-End Fund Advisors, Inc

7204 Glen Forest Drive, Suite #105Richmond, Virginia 23226 U.S.A(800) 356-3508 / (804) 288-2482

[email protected]

www.CEFData.com

Thank You For Attending

Questions?




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