Distinct, Timely, Value Added Funds

Our process for arbitraging closed-end funds seeks to explain as much of the discount as we can. We screen funds for NAV performance (a fund that consistently underperforms its benchmark and/or peers probably deserves to trade at a discount), expense ratios, cost and use of leverage, difficult to value securities, etc. It is the discount we can’t explain that is ultimately the arbitrage opportunity.

While some advisors look for opportunities to harvest tax-losses throughout the year, the vast majority usually don’t start thinking about it until late-summer/early-fall. At a minimum, they look to offset any short-term gains they may have taken earlier in the year or are anticipating taking over the balance of the year.