Having completed its first year in one of the most volatile market environments in history, Calamos Long/Short Equity & Dynamic Income Trust (CPZ) is marking its anniversary with an increase in its distribution and a positive view of the markets.
Calamos Founder, Chairman and Global Chief Investment Officer John P. Calamos, Sr. yesterday announced a $0.01 increase in the distribution per share, representing a more than 9% increased payout to shareholders (see press release).
2020 posed its share of challenges for closed-end funds, as we’ve commented throughout the year in blog posts and webcasts, and CPZ established itself by making its initial investments during this extremely volatile time. Even today, CEF price recoveries are lagging their respective NAVs as investors remain cautious heading into year-end—and this presents an opportunity to buy solidly performing CEFs at discounts to NAV, says Robert Bush, Calamos Senior Vice President and Director of Closed-End Fund Products.
In spite of CPZ investing into the teeth of one of the most precipitous equity declines in the history of financial markets (S&P 500 down 20% in Q1 2020), CPZ was able to recover to achieve a positive NAV return of 7.26% since inception (1-year) as of 11/30/20.
“In spite of generally positive returns generated by financial markets YTD, which is reflected in the performance of their underlying portfolios, most funds are trading worse relative to their respective NAVs than they were at the beginning of the year. This is especially the case for younger CEFs, like CPZ, with both limited trading and distribution histories that the market can assess,” Bush says.
In 2020, CPZ demonstrated an ability to deliver on the objective of offering both risk-managed returns and providing income to shareholders. “In spite of CPZ investing into the teeth of one of the most precipitous equity declines in the history of financial markets (S&P 500 down 20% in Q1 2020), CPZ was able to recover to achieve a positive NAV return of 7.26% since inception (1-year) as of 11/30/20,” Bush says.
The fund’s ability to garner income through its “fixed income sleeve” and preferred stock investments has been instrumental in maintaining and now increasing its distribution level, says Bush.
While the portfolio was engaged in capital preservation earlier this year, the CPZ team is now positioning for what they believe will be continued improvement in financial markets. The fund had more than an 80% net long equity exposure as of 10/31/20.
A significant focus is on underperforming sectors YTD, such as Industrials and Financials. These sectors have been the best performing areas in the S&P 500 over the past three months (as of 11/30/20), propelling CPZ's price and NAV returns to 12.41% and 11.00%, respectively, outperforming both the S&P 500 and the MSCI World Index for the same period.
CPZ is well positioned to participate in the “reopening trade” in equity markets, as the underperforming sectors favored by the fund may gain favor as the economy normalizes and the recovery in financial markets eventually broadens.
Investment professionals, for more information on CPZ or any of our seven closed-end funds, contact your Calamos Investment Consultant at 888-571-2567 or email@example.com.
Click here to view CPZ's standardized performance.
Before investing carefully consider the fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-800-582-6959. Read it carefully before investing.
Opinions are subject to change due to changes in the market, economic conditions or changes in the legal and/or regulatory environment and may not necessarily come to pass. This information is provided for informational purposes only and should not be considered tax, legal, or investment advice. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations.
Performance data quoted represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted. You can purchase or sell common shares daily. Like any other stock, market price will fluctuate with the market. Upon sale, your shares may have a market price that is above or below net asset value and may be worth more or less than your original investment. Shares of closed-end funds frequently trade at a market price that is below their net asset value.
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Shares of closed-end funds frequently trade at a market price that is below their net asset value. Leverage creates risks which may adversely affect return, including the likelihood of greater volatility of net asset value and market price of common shares; and fluctuations in dividend rates on any preferred shares.
The Calamos Closed-end Funds maintain a level distribution policy. Under the Fund's level rate distribution policy, distributions paid to common shareholders typically include net investment income and net realized short-term capital gains. When the net investment income and net realized short-term capital gains are not sufficient, a portion of the level rate distribution will be a return of capital. In addition, a limited number of distributions per calendar year may include net realized long-term capital gains. Distributions are subject to re-characterization for tax purposes after the end of the fiscal year.
Investment policies, management fees and other matters of interest to prospective investors may be found in each closed-end fund prospectus.
Current Annualized Distribution Rate is the Fund’s most recent distribution, expressed as an annualized percentage of the Fund’s cur- rent market price per share. The Fund’s most recent distribution was $0.1000 per share. Based on our current estimates, we anticipate that approximately $0.1000 is paid from ordinary income or capital gains and $0.0000 of the distribution represents a return of capital. Estimates are calculated on a tax basis rather than on a generally accepted accounting principles (GAAP) basis, but should not be used for tax reporting purposes. Distributions are subject to re-characterization for tax purposes after the end of the fiscal year. This information is not legal or tax advice. Consult a professional regarding your specific legal or tax matters. Under the Fund’s managed distribution policy, distributions paid to common shareholders may include net investment income, net realized short-term capital gains, net realized long-term capital gains and return of capital. When the net investment income and net realized capital gains are not sufficient, a portion of the level rate distribution will be a return of capital. In addition, a limited number of distributions per calendar year may include net realized long-term capital gains. Distribution rate may vary.
S&P 500 Index is generally considered representative of the U.S. stock market.
The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.