ECAT: 20% Yield, Significant Changes May Be On The Way
Closed end funds often sell discounted to their daily NAV/share, making them attractive for high-yield investors. BlackRock ESG Capital Allocation Term Trust is a CEF that focuses on environmental, social, and governance criteria. Saba Capital Management is attempting to take over management of the ECAT CEF, among other BlackRock funds, potentially leading to changes in performance and discounts to NAV.
Will ECAT And BCAT Be The Poster Children Of A Market Top?
There appears to be growing evidence that CEF fund sponsors and income-hungry investors are willing to sacrifice longer-term fund prosperity for higher yields today. By increasing annualized NAV distribution levels to as high as 20%, this is resulting in distribution increases of 60% to 120% just this year. This may be great news for shareholders and activist investors demanding action to reduce fund discounts and increase valuations. But is this all an act of desperation at a market top?
