The Contrarian Investor Podcast Opportunities in Closed-End Municipal Bond Funds: Jonathan Browne, RiverNorth Capital
Nov 21, 2024
Jonathan Browne, a portfolio manager at RiverNorth Capital specializing in closed-end municipal bond funds, shares his insights on investment opportunities in this niche market. He sheds light on the unique structure of closed-end funds compared to mutual funds and ETFs. Browne discusses expected yields and how discounts to net asset value present a contrarian investment strategy. He also addresses the risks posed by rising interest rates and inflation, while emphasizing how the current environment could favor savvy investors.
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Discount to NAV
- The discount to NAV for CEFs represents an opportunity to buy assets at a lower price than their market value.
- This discount can persist due to market dynamics and investor sentiment, offering alpha potential.
RiverNorth's Strategy
- RiverNorth Capital employs strategies that involve both long-only investments and hedging.
- They adjust their CEF exposure based on discount levels and volatility.
Discount Persistence and Activism
- CEF discounts can persist, but focusing on the most volatile discounts, not just the widest, is key.
- Funds with consistently wide discounts can attract activist investors, potentially impacting returns.