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Steve Baffico, Executive Vice President and head of listed products at Bluerock, discusses the fund's continuing transition and how making the move from a fund-of-funds to owning hundreds of individual properties is challenged by current market conditions. That has contributed to one of the widest discounts in the closed-end fund industry, currently standing above 40 percent, but Baffico explains the steps the company is taking to narrow that discount, why the firm has not done a share buy-back with the cash it is raising through the fund's transition, but why a buy-back might make sense later in the process. He also discusses trouble in the life-sciences real estate sector and more.

John Cole Scott, President of CEF Advisors, discusses a topsy-turvy third quarter for closed-end funds, in which prices fell roughly twice as far as the portfolios underneath them, but income mostly held up. Scott, who also serves as chairman of the Active Investment Company Alliance, says that resulting widening of discounts was particularly noticeable in taxable bond funds, which reached "the 99th percentile of cheapness," a level seen previously only during times of extreme market stress. Scott also discusses using hybrids like convertibles and preferreds, how convertibles had a tough quarter but saw discounts widen mildly, while preferreds had a more average quarter and saw discounts widen dramatically, highlighting why preferreds are safer during times when interest rate fluctuations are uncertain or rising, whereas convertibles tend to be a better opportunity when rates are clearly falling.

Nathan Shetty, Chief Investment Officer at SEI, discusses the evolving role of alternative investments, which have been de-emphasized by the media and financial planners due to the success of traditional equities. Shetty notes that sticky inflation and unpredictable interest rates are shifting the way alternatives can serve portfolios now, and says the focus should be on complementing equity strategies, mitigating risk and achieving true diversification. Shetty, who oversees the team that manages the SEI Alternative Income fund, says he is "not anti-A.I., but pro-productivity," looking past the A.I. eco-system to the businesses that benefit from the evolving technology. He also foresees some challenges ahead for credit markets, but does not think they will be disruptive to markets in the near term.

With Anthropic preparing to launch an initial public offering that could value the company at over $2 trillion, John Cole Scott, President of CEF Advisors, looks at buying pre-IPO stakes in closed-end funds, interval funds and ETFs that invest in private markets, and says that getting exposure to Anthropic and other popular IPOs isn't the hard part, paying for the right wrapper is. Scott, who also serves as chairman of the Active Investment Company Alliance, evaluates several funds of different structures to show what investors would actually be buying, how much they are paying per dollar of private exposure and why they have to come up with an exit strategy before they get in. He also discusses which fund and structure he would use for clients, and why some investors with different goals might make another choice.

Matt Kence, Portfolio Manager at Aberdeen Investments, discusses  the current state of the high-yield market and how it is responding to rising interest rates, noting that fundamentals remain surprisingly robust, with moderate levels of leverage and strong interest coverage. Kence, who manages the Aberdeen Credit Income Strategies fund (ticker ACP) says that defaults in the high-yield space have been well below long-term averages, but he does note that the selection of individual credits is critical right now, with the market seeing strong new issuance. Kence discusses the impact that artificial intelligence is making on the market — while noting that A.I. investments are a much bigger part of the private-credit market than the high-yield bond space — noting that while A.I.-adjacent industries like power generation feel stable, the spreads there are narrower than with less-proven companies developing A.I. products directly, making the bigger opportunity with the tech companies.

Young Choi, Portfolio Manager for the XAI Floating Rate & Alternative Income Trust, says there is more value and broad movement in the secondary markets for equity collateralized loan obligations, whereas opportunities in debt CLOs have been more specific and sporadic. Choi, the global head of trading at King Street and a portfolio manager for Rockford Tower, which took over as advisor for the XAI fund, discusses how the CLO market has been changed by the emergence of CLO ETFs, noting that they debuted in 2021 and needed nearly a year to achieve $1 billion in assets, but now are seeing roughly $2 billion in in-flows every month, adding a "significant new and growing buyer" into the marketplace and compressing spreads. Choi also discusses differences in the private credit and CLO markets, noting that any blow-up or problem in the private space could have spillover effects that create buying opportunities in CLOs.

John Cole Scott, President of CEF Advisors, answers listener questions today, including one from an investor with two closed-end funds that have been stuck with large discounts seemingly the entire time he has owned them. Scott, who also serves as chairman of the Active Investment Company Alliance, discusses how discounts change a fund's risk profile, even if they never get narrowed, and how investors should value and perceive those benefits. He also answers questions on achieving balance in a portfolio of closed-end funds, the drawbacks and benefits of using funds that invest in closed-end funds and more.

Business-development companies saw their share prices get hammered early this year as the market worried about an overexposure to parts of the software industry that could be negatively impacted by artificial intelligence. John Cole Scott, President of CEF Advisors, looked at BDC data before and since those problems and says it appears that fears of A.I. risk were exaggerated since "We're still not seeing software blowing up BDCs." Scott, who also serves as chairman of the Active Investment Company Alliance, thinks it may take another two quarters of data to confirm that trend, but he says that BDCs have not seen a dramatic rise in non-accruals or "exacerbated losses ... in a material way," with research showing the a lot of the most severe issues were isolated in "the bottom cohort" of BDCs, the outliers with the most exposure that made headlines amid the software downturn early this year.

Rob Thummel, Senior Portfolio Manager at Tortoise Capital, says that for all of the power needs created by artificial intelligence, producers still need their power costs to be reasonable, and he expects that natural gas will lead the way going forward. Thummel, who runs Tortoise Energy Infrastructure fund, says current conditions for energy infrastructure remain the most favorable he has seen in 30-plus years as a portfolio manager, largely because energy is "the foundation of the A.I. five-layer cake" famously described by Nvidia president Jensen Huang. Thummel says that while investors have been light on energy allocations historically, this would be a bad time to be underweight energy, because positive conditions are setting up tailwinds that could last for years.

Treasury rates hit their highest level in nearly 20 years this week; in response, the Treasury announced it was doubling its long-end buyback capacity. John Cole Scott, President of CEF Advisors, discusses what it all means for fixed-income markets and how it is impacting closed-end funds and their investors. The two actions at the center of the action call for a barbell approach, says Scott, who serves as chairman of the Active Investment Company Alliance; for the time being, however, it, noting that at least for the time being it is more about portfolio tilts and mild changes than an overhaul or a big buying opportunity.

When closed-end funds catch mentions in the mainstream media, the recommendations often focus on yield without digging deeper. In this episode of The NAVigator, John Cole Scott, President of CEF Advisors, looks at some recent closed-end fund recommendations from articles on Forbes and Seeking Alpha, and breaks down how those funds do through the "trifecta analysis" his firm uses to select funds, pointing out the shortcomings of using a rigid criteria or focusing on partial information to make decisions. Scott, who also is the chairman of the Active Investment Company Alliance, offers suggestions for what he would use in portfolios in place of the media recommendations.

Discount-capture investor Rob Shaker, Portfolio Manager at Shaker Financial Services, says that while closed-end fund discounts have widened through a strong season of earnings and a market returning to flirt with new highs, much of that action has been "good widenings," where a fund's net asset value goes up more than the price of the closed-end fund itself. With the market "snapping around" with heightened volatility, Shaker says that the indexes have been pulling up faster than closed-end funds can move, creating attractive buying opportunities. While liking that potential for gains, Shaker says that closed-end funds generally "have been pretty laid back," without much fear but also without much optimism, even as the market has resumed its climb higher.

Scott Caraher, Head of Senior Loans at Nuveen, says that the higher-for-longer interest rate environment has created "one of the most interesting and dynamic times" he has seen for senior loans in his 25-year career. Caraher, who manages Nuveen Floating Rate Income in both its closed-end and open-end forms, says that because senior loans don't face interest-rate risk, they are a powerful play in a market where Federal Reserve policy on rate direction is uncertain, noting that it's possible to create strong portfolios yielding about 7 percent, which he called "incredibly attractive ... on both an absolute and relative basis."

John Cole Scott, President of CEF Advisors, provides takeaways from the second quarter for closed-end funds and business-development companies, noting that the trend was for investors to make most of their money on net asset values rather than narrowing discounts, which creates potential for a strong second half of 2026 if there is an uptick in investor sentiment. Scott, the chairman of the Active Investment Company Alliance, brought forward data from his firm's quarterly outlook presentation this week, noting that it shows that while headline risks have hurt BDC prices, underlying strength should make for a strong rebound later in the year, particularly as the actions of the Federal Reserve become more clear.

Ray DiBernardo, Portfolio Manager for the XAI Madison Equity Premium Income fund, says he's concerned about the market's valuation levels — noting that it "has been expensive for quite some time" — and while he is not expecting "dark clouds and a horrible environment," there's more downside risk, which could lead to market compression that puts covered-call strategies back into the spotlight as a defensive play. DiBernardo, an analyst at Madison Investments, says the proliferation of options strategies should make investors more diligent about exploring strategies, and he discusses single-stock options versus index options and the risk-reward picture with each. DiBernardo notes that covered-call strategies aren't right for people "who believe the market will keep going straight up from here," but he notes that for nervous investors, the options strategy acts like portfolio insurance and the discount on a closed-end fund can help to make up for the upside potential that the strategy trades for that protection.