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RiverNorth Opportunities' 12.4% Yield Comes With Caveats

Published Fri, 08 Nov 2019 07:00:00 -0500 on Seeking Alpha

RiverNorth Opportunities Fund (RIV)
This is a fund-of-funds that was created in late 2015 as a means of taking advantage of the ultra-wide discounts that existed during that time. Interest rates were about to be increased for the first time in nearly 9 years, and investors were scared of the ramifications for CEFs. The time frame of when a CEF is launched can be highly determinant of how well it will perform in subsequent years.
Launching a CEF when the market for such a fund is already "hot" typically leads to lower future returns. Launching when that strategy or sector is out of favor can be a significant advantage for future performance. For example, muni CEFs launched just after the Taper Tantrum of 2013 have performed better than those launched in 2016 (and likely for those launched in the later half of this year).
The annual report through the end of July was recently released, which provided some insight into where the CEF experts at RiverNorth feel there are some opportunities. The objective of the portfolio is simply total return consisting of capital appreciation and current income. They can own, in addition to CEFs, business development companies ("BDCs"), special purpose acquisition companies ("SPACs") and exchange-traded funds ("ETFs"). The portfolio is unlevered.
Remember, this fund is a term trust (meaning that it will self-liquidate at a certain time but not a certain price) with a slated date to convert to an open-ended fund during calendar 2021. There... Read more