Saba Closed-End Funds ETF

CEFS

Market cap $383M

Dividend investing isn't just a defensive play or a retiree's game.

FOF is rated 'Buy' for income-oriented investors, but only after a technical correction from its overheated premium. Current FOF premium (8.72% P/NAV, Z-score 4.85) signals short-term overvaluation; optimal entry is at a 1.01x–1.03x P/NAV. FOF and CEFS are compared here as they represent the main rivals for capital within the specialized 'fund of funds' space.

Saba Closed-End Funds ETF is rated Buy for income-focused investors seeking reliable monthly distributions and long-term total return. CEFS offers an 8.2% TTM yield, monthly $0.14/share payments, and periodic special dividends, supported by Saba Capital's activist management expertise. The fund's highly diversified portfolio spans over 1,000 positions across equities, fixed income, and alternatives, trading near NAV with a 0.35% premium.

CEFS is an actively-managed fund investing in over a dozen income-producing CEFs. It yields 7.4% and has significantly outperformed its benchmark since inception. Although the fund continues to outperform, fundamentals have somewhat worsened across the board.

Saba Closed-End Funds ETF (CEFS) targets CEFs trading at discounts to NAV, aiming for income and capital appreciation through active management. CEFS currently offers a 7.3% yield, and charges a 1.1% management fee within a fund-of-funds structure, with total expenses of 4.3%. The portfolio has shifted to a more defensive stance, with increased cash holdings and a concentrated exposure in top holdings, primarily in the US.

Every month I share what closed-end funds I've been buying in the last month. For July, that included swapping out some holdings in favor of others and consolidating my portfolio a bit. In doing that, it also included swapping out of two CEFs in favor of ETF positions, one of which I already held a position in.

Saba Capital Closed-End Funds ETF (CEFS) is a fund of closed-end funds paying a monthly distribution with special dividend in December. Founder Boaz Weinstein's activist approach drives outperformance, and a high total return. CEFS offers exceptional diversification across 1,000+ positions in stocks, bonds, and alternatives, with active management justifying higher expenses.

Saba Closed-End Funds ETF (CEFS) offers unique exposure to CEF arbitrage, capitalizing on discounts to NAV and activist strategies for potential alpha. Despite an extremely high 4.29% expense ratio, the fund's historical performance and yield (9.39% SEC, 7.74% distribution) are impressive and help justify a buy rating. CEFS is best suited for income-oriented investors seeking risk-adjusted, multi-asset returns, but requires understanding of CEF dynamics and tolerance for volatility.

Saba Closed-End Funds ETF offers high monthly income and capital appreciation by investing in discounted CEFs, actively managed by Saba Capital's activist strategy. Recent activism, especially with BlackRock CEFs, has successfully narrowed discounts and boosted returns, but future gains from activism may be limited. CEFS outperforms peer funds and maintains consistent distributions, but risks include interest rate hedges and the potential widening of CEF discounts in corrections.

Closed-end funds offer unique opportunities due to the structure, which allows for the share price to swing wildly different from the underlying portfolio value. There are activist groups that specifically target these in a way to take advantage of this feature within the closed-end fund space. On top of that, it also provides significant diversification by investing in already diversified CEFs, and additionally, this can translate into strong monthly distributions.