In an interview recorded at the Active Investment Company Alliance Fall Round Table in New York City on Wednesday, Nov. 19, David Tepper of Tepper Capital Management talks about the state of the closed-end fund business, ranging from the classic funds he has held for a many years to his concerns about the boom in private credit, the potential for trouble if the economy turns and what he might be looking to invest in if the market turns away from the large-cap tech companies that have been leading the way for the market.

Josh Duitz, Global Head of Income for Aberdeen — Manager of the Aberdeen Total Dynamic Dividend Fund — talks about where he is finding success in generating elevated income at a time when rate cuts are making it harder for investors to earn easy yields. Duitz discusses international investing and whether the rally overseas can continue in the face of reduced currency impacts, where high-flyers like the Magnificent Seven stocks fit in with his portfolio (or don't), and which sectors he is finding most attractive right now.

Seth Brufsky, Chief Executive Officer for the Ares Dynamic Credit Allocation Fund, talks about how the start of rate cuts and a falling interest rate environment impacts high-yield bonds, leveraged loans and collateralized loan obligations, noting that fixed-rate high-yield investments should get a boost from lower rates, but that the floating-rate paper also can benefit thanks to better arbitrage opportunities and improved credit quality. Brufsky notes that rate-cut environments should give active management an edge over passive funds, at least for a time as the market adjusts to the changes.

Ravi Chintapalli, Client Portfolio Manager covering leveraged finance for the Nuveen Global Fixed Income team, says that he has never seen a high-yield market that has been higher quality than what he is seeing now. That helps to explain tighter spreads, and suggests they should not shy away from high-yield because they're being compensated for "the true level of default risk in the market." On the loan side, Chintapalli says that while the Federal Reserve has entered a rate-cutting cycle, it shouldn't scare investors out of floating-rate loans, because they would be passing up high levels of income as a starting point to minimize default risks that are already quite low and likely to stay that way.

Discount-capture investor Rob Shaker, Portfolio Manager at Shaker Financial Services, says that he's "not seeing anything in the closed-end fund space that would point to any type of bubble conditions." He sees generic, slow widening of discounts happening now, mostly due to a mix of year-end tax-loss moves starting now and some fund-specific actions, rather than because investors have lost faith and courage in current market conditions. Still, Shaker does see potential market storms coming and he says investors should make sure they are comfortable that they can weather those flurries "and readjust to the better things that are on sale and then double-collect on the way up."

John Cole Scott, President of CEF Advisors, discusses the changing landscape of business-development companies and the details he gleaned from attending the recent Eversheds BDC Roundtable, which focused on legislative and other issues that are creating challenges and opportunities for the industry. Scott, the Chairman of the Active Investment Company Alliance, weighs in on the potential for changing quarterly reporting requirements, the impact of easing restrictions of holdings for retirement plans and more.

Drake Hicks, Head of Impact Investing at Variant Investments, discusses the unusual intersection of closed-end funds with impact investing, which goes beyond ESG (environmental, social and government principles) to invest in projects which have a purpose beyond just a profit margin. The firm runs the Variant Impact Fund, a high-yield closed-end interval fund whose assets are aligned with the United Nations' sustainable development goals, and Hicks talks about how shareholders benefit from the interval structure.

Ray DiBernardo, Portfolio Manager of the XAI Madison Equity Premium Income fund, says that covered-call strategies have become increasingly popular of late, as investors want to goose income while reducing market risk. DiBernardo, an analyst at Madison Investments, notes that investors have been intrigued by covered-call strategies for about two decades, but the availability of more options-based strategies through the advent of ETFs has made investors more aware of how to find income-enhancement through covered calls. DiBernardo, notes that covered call strategies did well in 2022, when the overall market was struggling, which also has increased their use as a hedge against market risk with the market trading at record highs.

John Cole Scott, President of CEF Advisors, talks about how current conditions have made for nervous times in the business-development company space, and he looks at history to determine whether the risks are systemic rather than situational. The conversation looks at how the BDC space has gotten extensive scrutiny recently from the Financial Times and on sites like Seeking Alpha, with some observers forecasting trouble ahead; Scott, who is also the chairman of the Active Investment Company Alliance, acknowledges the potential for trouble but also highlights the differences between the top tier companies and the weaker players to conclude that there is less danger than the coverage suggests.

Axel Merk, Chief Investment Officer of the ASA Gold and Precious Metals Fund, says that while gold has been rolling this year, the start of rate cuts along with a weakening dollar and persistent geopolitical risks (including tariffs) make it that there is no end in sight for the precious metals rally to continue. ASA Gold, which invests largely in junior mining companies, is up more than 100 percent year-to-date (compared to roughly 40 percent gains for physical gold ETFs), but still carries a double-digit discount, and Merk explains why that is logical given current market conditions.