Bonus NAVigator: Oppenheimer's Penn is watching how credit losses weigh on BDCs
Release Date: 06/13/2025
David Tepper on how economic woes could create a closed-end meltdown
The NAVigator
In an interview recorded at the Fall Round Table in New York City on Wednesday, Nov. 19, David Tepper of Tepper Capital Management talks about the state of the closed-end fund business, ranging from the classic funds he has held for a many years to his concerns about the boom in private credit, the potential for trouble if the economy turns and what he might be looking to invest in if the market turns away from the large-cap tech companies that have been leading the way for the market.
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Aberdeen's Duitz on where he's turning for dividend growth now
The NAVigator
Josh Duitz, Global Head of Income for — Manager of the — talks about where he is finding success in generating elevated income at a time when rate cuts are making it harder for investors to earn easy yields. Duitz discusses international investing and whether the rally overseas can continue in the face of reduced currency impacts, where high-flyers like the Magnificent Seven stocks fit in with his portfolio (or don't), and which sectors he is finding most attractive right now.
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ARDC's Brusky on how active management drives opportunities in a changing rate environment
The NAVigator
Seth Brufsky, Chief Executive Officer for the , talks about how the start of rate cuts and a falling interest rate environment impacts high-yield bonds, leveraged loans and collateralized loan obligations, noting that fixed-rate high-yield investments should get a boost from lower rates, but that the floating-rate paper also can benefit thanks to better arbitrage opportunities and improved credit quality. Brufsky notes that rate-cut environments should give active management an edge over passive funds, at least for a time as the market adjusts to the changes.
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Nuveen's Chintapalli says the high-yield market has never looked less junky
The NAVigator
Ravi Chintapalli, Client Portfolio Manager covering leveraged finance for the , says that he has never seen a high-yield market that has been higher quality than what he is seeing now. That helps to explain tighter spreads, and suggests they should not shy away from high-yield because they're being compensated for "the true level of default risk in the market." On the loan side, Chintapalli says that while the Federal Reserve has entered a rate-cutting cycle, it shouldn't scare investors out of floating-rate loans, because they would be passing up high levels of income as a starting point to...
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Year-end action - not bubble worries - will drive year-end CEF discounts
The NAVigator
Discount-capture investor Rob Shaker, Portfolio Manager at , says that he's "not seeing anything in the closed-end fund space that would point to any type of bubble conditions." He sees generic, slow widening of discounts happening now, mostly due to a mix of year-end tax-loss moves starting now and some fund-specific actions, rather than because investors have lost faith and courage in current market conditions. Still, Shaker does see potential market storms coming and he says investors should make sure they are comfortable that they can weather those flurries "and readjust to the better...
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John Cole Scott on what's next for the BDC, private credit markets
The NAVigator
John Cole Scott, President of , discusses the changing landscape of business-development companies and the details he gleaned from attending the recent Eversheds BDC Roundtable, which focused on legislative and other issues that are creating challenges and opportunities for the industry. Scott, the Chairman of the , weighs in on the potential for changing quarterly reporting requirements, the impact of easing restrictions of holdings for retirement plans and more.
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Variant's Hicks on mixing an impact on more than investors' finances
The NAVigator
Drake Hicks, Head of Impact Investing at , discusses the unusual intersection of closed-end funds with impact investing, which goes beyond ESG (environmental, social and government principles) to invest in projects which have a purpose beyond just a profit margin. The firm runs the Variant Impact Fund, a high-yield closed-end interval fund whose assets are aligned with the United Nations' sustainable development goals, and Hicks talks about how shareholders benefit from the interval structure.
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XA's DiBernardo on covered-call strategies gaining ground and popularity
The NAVigator
Ray DiBernardo, Portfolio Manager of the , says that covered-call strategies have become increasingly popular of late, as investors want to goose income while reducing market risk. DiBernardo, an analyst at Madison Investments, notes that investors have been intrigued by covered-call strategies for about two decades, but the availability of more options-based strategies through the advent of ETFs has made investors more aware of how to find income-enhancement through covered calls. DiBernardo, notes that covered call strategies did well in 2022, when the overall market was struggling, which...
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Are falling rates, changing conditions setting up BDCs for a fall?
The NAVigator
John Cole Scott, President of , talks about how current conditions have made for nervous times in the business-development company space, and he looks at history to determine whether the risks are systemic rather than situational. The conversation looks at how the BDC space has gotten extensive scrutiny recently from the Financial Times and on sites like Seeking Alpha, with some observers forecasting trouble ahead; Scott, who is also the chairman of the , acknowledges the potential for trouble but also highlights the differences between the top tier companies and the weaker players to conclude...
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With his fund up 100% this year, veteran manager says gold can go higher
The NAVigator
Axel Merk, Chief Investment Officer of the , says that while gold has been rolling this year, the start of rate cuts along with a weakening dollar and persistent geopolitical risks (including tariffs) make it that there is no end in sight for the precious metals rally to continue. ASA Gold, which invests largely in junior mining companies, is up more than 100 percent year-to-date (compared to roughly 40 percent gains for physical gold ETFs), but still carries a double-digit discount, and Merk explains why that is logical given current market conditions.
info_outlineMitchel Penn, Managing Director at Oppenheimer & Co. — interviewed at the Active Investment Company Alliance BDC Forum in New York on Wednesday — says that credit losses for business development companies during the first quarter of 2025 were more than double the level they have been at for the last few years. Penn says some of that increase could be attributed to the market's reaction to government policies, but that it also could be that interest rates have stayed higher for so long now that they are starting to create credit-quality issues. He said BDCs can still deliver returns in the range of 9% moving forward, though he warned that an increasing number of business-development companies may struggle to earn their dividends, making it particularly important for investors to check under the hood to make sure the yield is real and not goosed by return of capital.