The NAVigator | March 24, 2023

RiverNorth Portfolio Manager Steve O'Neill discussed municipal closed-end funds with Chuck Jaffe on The NAVigator.

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Definitions & Disclosures

• A Closed-End Fund is a portfolio of pooled assets that raises a fixed amount of capital through an initial public offering (IPO) and then lists shares for trade on a stock exchange.
• The price at which a closed-end fund trades often varies from its net asset value (NAV). Some funds have market prices below their net asset values - referred to as a discount. Conversely, some funds have market prices above their net asset values - referred to as a premium.
• A percentile is a value on a scale of 100 that shows the percentage of a distribution that is equal to or below it.
• Tax loss selling or harvesting is the selling of securities at a loss to offset a capital gains tax liability.
• Municipal Closed-End Funds are defined as closed-end funds that invest in a diversified portfolio of investment-grade municipal bonds in a variety of sectors and States.
• Basis points refer to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01%, or 0.0001, and is used to denote the percentage change in a financial instrument.
• Yield refers to the earnings generated and realized on an investment over a particular period of time.
• The Federal Funds Rate refers to the interest rate that banks charge other institutions for lending excess cash to them from their reserve balances on an overnight basis.
• An inverted yield curve shows that long-term interest rates are less than short-term interest rates.
• Separately Managed Account (SMA) is an investment portfolio owned by an investor and managed by a professional investment firm—typically registered investment advisors(RIA).
• A bond rating is a letter-based credit scoring scheme used to judge the quality and creditworthiness of a bond. Investment grade bonds assigned “AAA” to “BBB-“ ratings from Standard & Poor's, and Aaa to Baa3 ratings from Moody’s. Junk bonds have lower ratings.
• Duration is a measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates. Duration is non-linear and accelerates as time to maturity lessens.
• Alpha is a measure of performance on a risk-adjusted basis. The excess return of a fund relative to the return of the benchmark index is a fund's alpha.
• A bond default occurs when the issuer of the bond fails to make interest or principal payments within the specified period.
• Leverage results from using borrowed capital as a funding source when investing to expand the firm's asset base and generate returns on risk capital.
• The Global Financial Crisis (GFC) of 2008-2009 refers to the massive financial crisis the world faced from 2008 to 2009.

Diversification does not ensure a profit or a guarantee against loss.

Past performance is no guarantee of future results.

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