OPP, RIV: Hope You Weren’t Caught Out

A few weeks ago in one of our articles we discussed how investors can take advantage of CEF managed distribution policies. These policies spell out how CEF distributions are calculated which allow investors to anticipate their changes. And because discounts often follow changes in distributions, investors can pre-position for shifts in discounts. This doesn’t work all the time but it can allow investors to anticipate these important changes by either moving into funds about to raise distributions or move out of funds that are about to cut. This is particularly relevant as CEFConnect takes time to reflect these distribution changes which can delay investor reaction.

The RiverNorth/DoubeLine Strategic Opportunity Fund (OPP) and the RiverNorth Opportunities Fund (RIV) both feature MDPs which set their distribution based on the average NAV of the last 5 days of the year.

Because the NAVs of these two funds were lower at the end of 2020 than they were when the prior distribution was set a year prior, both funds made substantial cuts in their distributions in the first week of 2021.

As expected, OPP’s distributions moved from $0.18 to $0.1586 and RIV fell from $0.18 to 0.$17. Hope you weren’t caught out!

Thanks for reading.

Check out the rest of our daily market commentary, as well as our Income Portfolios and interactive Investor Tools at Systematic Income.

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