The NAVigator

Rob Shaker, portfolio manager at Shaker Financial, says that the current market has been hard on closed-end funds because closed-end instruments suffer any time there is fear-based selling. He warns against trading any time CNBC carries a graphic saying 'Markets in turmoil.' Yet, he adds, troubling times also make closed-end funds compelling values, so long-term investors want to be prepared to step in once they are comfortable that the market has stabilized, and he talks about whether that time is now, when the market has rebounded for a few days.

Bryce Rowe, senior equity research analyst for business development companies at National Securities, says that the current market turmoil has dropped prices -- expanding discounts -- while jacking up yields to massive levels, in some cases with payouts now set to be north of 30 percent. While he expects BDCs to dramatically trim those enormous distributions, he suggests that the compelling values and strong payouts -- which could stay near 10 percent even after cutbacks -- make it a good time to carefully consider adding business development companies to a portfolio for income and diversification.

John Cole Scott, chief executive officer at Closed-End Fund Advisors and executive chairman of the Active Investment Company Alliance discusses the state of closed-end funds in the middle of the stock market's current meltdown. He notes that discounts have grown wider since the market stepped back from all-time highs in February, notes that yields have become even more attractive, urges caution in the use of leveraged funds, and offers a few attractive options for today's tough conditions

Rick Konrad, director of value strategies at The Roosevelt Investment Group says that closed-end funds have some natural advnatages over traditional mutual funds and ETFs when it comes to investing with a value bent, and while he uses all of the various types of investments, he makes a case for how and why an investor might want to pay up -- in terms of expense ratios and portfolio costs -- for closed-end funds and business-development companies because it can pay off in superior long-term returns.

John Cole Scott, chief investment officer at Closed-End Fund Advisors and executive chairman of the Active Investment Company Alliance, joins the podcast today to talk about a very popular type of closed-end asset -- municipal bonds -- and one that has been trending, but which has just 13 closed-end options, preferred stocks. Scott covers key investment considerations for each asset class, noting that muni bonds are a particularly popular yield choice for investors today, while pointing out that a key concern about the preferred funds is that virtually all of them now trade at premiums.

Tony Huang, associate portfolio manager for the Advent Convertible and Income Fund, discusses the compelling reasons to add convertible securities -- a hybrid security that can act like either a stock or bond -- to a stock portfolio, noting that the flexibility of the security helps to mitigate risk, especially in volatile times. Huang talks about how different fund managers and individuals evaluate and purchase convertibles, whether convertibles are an asset class unto themselves or a reflection of the category of the company issuing the bonds, and more.

John Yesford, analyst at High Dividend Opportunities, comes to the NAVigator to help explain 'return of capital,' which many investors worry about as a warning sign that a closed-end fund is struggling or headed for trouble. Yesford explains that, with the right conditions, a return of capital doesn't diminish a good opportunity and talks about what investors should look for and consider to find those situations.

The NAVigator looks at a unique offering today as Christian Munafo of SP Investment Management discusses his firm's Sharespost 100 Fund, an actively managed, continuously offered, closed-end interval fund that buys late-stage venture-backed private companies, a part of the alternative-investment world normally reserved for high net worth individuals and venture capital firms. Munafo discusses how the fund looks for unicorns, the unusual company that can move from start-up to billion-dollar private company on the way to someday going public.

Mitch Reiner, chief operating officer at Capital Investment Advisers, says he considers closed-end funds one of six key asset classes for delivering income in an investment portfolio, and while he acknowledged that his view is unique because closed-end issues can hold any type of asset within them, he said the discount structure makes them unique and therefore a necessary element for strategies where income is the primary focus.

Audience members have questions, and John Cole Scott has answers. The chief investment officer at Closed-End Fund Advisors and executive chairman of the Active Investment Company Alliance answers three queries from audience members this week, one on closed-end basics, one from an investor trying to make sure he has the right fit before making his first closed-end fund purchase, and one about the ongoing and future content content of this podcast.