Closed-End Fund Advisors Portfolio Models
Closed-End Fund Advisors' Portfolio Models

International Opportunities

Diversified portfolio of non-US and global sector of closed-end funds. We seek to blend our global market outlook with the ability to buy funds, often at significant discounts to NAV while having the opportunity for discount narrowing over time. Yield is a byproduct of the model as many CEFs pay at least annual or semi-annual distributions. We expect the model to be 60%-80% Equity exposure and 55% to 85% Non US holdings at the fund level. We seek duration of the portfolio on a "cash weighted" basis under 2 and a Beta to the S&P 500 between 0.75 and 0.90.

Diversified Equity

Diversified portfolio seeking primarily equity exposure. The Beta to the S&P 500 is expected to be 0.85 to 1.15. This model is a good candidate for adding SpiderRock's option overlay, as you could outperform in an option-overlaid portfolio when the holdings are more volatile by nature. This portfolio is expected to have little to no duration exposure.

Diversified Growth

Diversified portfolio focusing on the sectors and funds where we see the best risk-adjusted growth potential. Yield is a byproduct of the model as many CEFs pay at least annual or semi-annual distributions. We expect the model to be 65% to 90% equity exposure based on the fund's reported holdings and seeking to have duration of the portfolio on a "cash weighted" basis around 1 and a Beta to the S&P 500 between 0.70 and 1.0.

Hybrid (High) Income

Diversified portfolio seeking 50/50 allocation to equity and debt at the fund level; focusing on the highest sustainable dividend levels possible in the current environment with at least 75% of funds paying monthly. Historically 8%-9% is our target income level. We seek to have duration of the portfolio on a "cash weighted" basis under 2 and a Beta to the S&P 500 between 0.75 and 0.95. We offer a 100% monthly paying version of this model (#4.2) for investors that seek this feature to their investment needs and a Tax-Advantaged version of this model (#4.1). A SpiderRock overlay can be a nice addition to this model.

Discount Opportunity

Diversified portfolio seeking 50/50 allocations to equity and debt at the fund level. Researching funds that both have a larger than average absolute discount to NAV as well as wider than normal Comp Discount (vs. peer-group average) without a significantly worse NAV total return performance vs. their peer funds. This model can work well for contrarian investors. A SpiderRock overlay can be a nice addition to this model.

Alternative Income

Diversified portfolio seeking 40/60 allocation to equity and debt at the fund level; focusing on less "plain vanilla" or core sectors and managers that could offer a more "hedge fund" like experience and a diversifier to traditional equity and bond allocations. We seek 2% a quarter in distributions at roughly half the Beta to the S&P 500 during normal market conditions with "cash weighted" duration under 2. We offer a Tax-advantaged version of this model (#6.1). A SpiderRock overlay can be a nice addition to this model.

Foundation/Balanced

Diversified model based on a 60% equity / 40% debt allocation at the fund level. We believe this model is a "medium risk portfolio" for a typical retired investor. Historically 7%-8% is our target income level. We seek to have duration of the portfolio on a "cash weighted" basis under 2.5 and a Beta to the S&P 500 between 0.60 and 0.85. This model is a good candidate for adding SpiderRock's option overlay, as you could outperform in an option-overlaid portfolio at these Beta levels. We offer a "Tax Advantaged" version of this model (#7.1), that could reduce the after-tax friction by 65%-75% for a typical investor in a taxable environment. We also offer more conservative portfolio (Conservative Diversified), comprised of 2/3 the F/B model and 1/3 invested in non-traditional asset classes using ETFs and open-end funds to reduce the expected volatility over time.

Taxable Bond and BDC

Diversified portfolio focused on the taxable bond and debt-focused business development company (BDC) sectors. This income focused model historically targets a 7%-8% income level. It seeks "cash weighted" duration under 4 and a Beta to the S&P 500 from 0.35-0.50.

Dividend Confidence Model

Diversified portfolio of roughly 50% equity and bond funds where we see above average dividend coverage as the primary factor after our Trifecta analysis. Historically 6.25% - 7.5% is our target income level and we expect durations under 2.5 and a beta under 0.80.

Diversified Low Beta

Diversified portfolio seeking 50/50 allocations to equity and debt at the fund level focusing on a lower Beta for to the S&P 500 in the sector when selecting funds. We seek to have duration of the portfolio on a "cash weighted" basis under 1.75 and a Beta to the S&P 500 between 0.40 and 0.60. This model is a good candidate for adding SpiderRock's option overlay, as you could potentially lower the Beta to 0.25 to 0.40 levels.

Low Correlation

Diversified portfolio seeking roughly 50/50 allocations to equity and debt at the fund level. Focusing on exposure to the CEF sectors we find have the lowest long-term NAV correlations to each other. Historically 6%-7% is our target income level. We seek to have duration of the portfolio on a "cash weighted" basis under 3.25 and a Beta to the S&P 500 between 0.50 and 0.70. We offer an "IRA" version of this model (#11.1) that replaces Build America Bond (BABs) exposure for the municipal bond exposure. A SpiderRock overlay can be a nice addition to this model.

Diversified Tax-Sensitive Income

Designed to maximize after-tax yield for high income investors seeking little-to-no tax friction. Equal weight exposure to three CEF sectors who historically have low correlation: municipal bonds, master limited partnerships and tax-advantage equity funds. Muni's, the most common tax-avoidance sector for many investors has a 39% 10 Year NAV correlation to MLPs and 33% correlation to Covered Call Funds. Covered Call funds have only a 70% correlation to MLP funds. We seek a Beta to the S&P 500 of 0.55 to 0.70 and an after-tax yield of 6% to 7%. Duration is expected to be under 4. We offer a Municipal bond overweight version of this model (#12.1) where 50% of the portfolio is Muni bond CEFs.

Business Development Company Select

Diversified portfolio of BDCs with strong fundamental research on each BDC's portfolio and management. Seeking BDCs exposure with above average dividend sustainability, NAV performance, variable and senior secured loan exposure as well as low non-accruals (defaults). We look for sector and geographic diversity. We expect a Beta to the S&P 500 of 0.6 to 0.8 and historically yield levels of 8.5% to 9.5% are common. BDCs have low 10-year correlation to most asset classes; including 15% to municipal bond, 13% to preferred equity and 27% to REITs and only a 40%-43% correlation to high yield and Sr. loans. We offer a "100% monthly paying only" (#13.1), "low Beta" (#13.2) and Premium BDC version of this model (#13.3).

Municipal Bond Select

A focused portfolio managed for 100% tax-free municipal bond exposure. We seek to build and manage the portfolio for better than average: discount to NAV, NAV total return performance, distribution levels, duration exposure, dividend coverage and other criteria we believe can give investors a better experience when looking to allocate funds into this sector. We also offer this model with lower duration (and yield) exposure (#14.1).

CEFA Select "Six Pack" Income

This is a Diversified portfolio of fund in the following six sectors: Business Development Companies, Covered Call Funds, Loan Participation Funds, Preferred Equity Funds, REIT/ Real Asset Funds and Utility / Infrastructure Funds. They are expected to be weighted with a min allocation of 10% and Maximum allocation of 20% per sector. Exposure should be at a minimum of 40% for both equity and fixed-income holdings for the underlying funds. We anticipate the yield being about 1% higher than the 12 Major Sector Index under normal market conditions.

CEFA Composite Performance (Net)*
As of August 31, 2021
Investment Portfolio Model QTD YTD 1 Year 3 Year 5 Year 10 Year Since Inception Inception Date
Alternative Income 0.33% 20.70% 37.18% 5.06 N/A N/A 6.11% 7/1/2018
Alternative Income Tax Advantaged 0.82% 22.50% 38.29% N/A N/A N/A 10.55% 11/1/2018
Conservative Diversified 0.88% 13.40% 21.77% 4.48% 6.06% 4.97% 5.77% 5/1/2009
Diversified Low Beta -0.07% 17.78% 32.06%> 7.19% N/A N/A 6.38% 4/1/2017
Low Correlation 1.91% 22.35% 37.14% 9.33% N/A N/A 8.40% 3/1/2017
Foundation/Balanced 0.58% 18.99% 34.45% 8.07% 7.91% 6.87% 7.35% 9/1/2009
Foundation/Balanced Tax-Advantage 0.45% 16.77% 29.02% 8.27% N/A N/A 9.78% 1/1/2017
Foundation/Balanced Tax-Advantage with Overlay 0.53% 17.84% 30.08% 1.26% N/A N/A 0.80% 9/1/2017
Global Growth & Income 0.25% 16.75% 29.95% 4.19% 5.67% 5.11% 4.31% 1/31/1999
Globally Diversified Growth 0.79% 18.58% 34.52% 8.15% 8.66% 7.70% 6.31% 1/31/1999
Hybrid Income 1.19% 26.25% 45.37% 6.68% 7.84% 8.10% 5.99% 12/1/2006
Benchmarks QTD YTD 1 Year 3 Year 5 Year 10 Year Since Inception Inception Date
CEF Advisors 12 Major CEF Sectors (MKT) 1.40% 21.00% 37.62% 11.35% 10.10% N/A 9.72% 12/30/2011
S&P 500
Total Return
5.49% 21.58% 31.17% 18.07% 18.02% 16.34% 7.93% 1/31/1999
Barclays Capital Global Aggregate Bond 0.91% -2.33% 0.52% 4.56% 2.47% 1.81% 4.05% 1/31/1999
MSCI World (Ex-US) 2.28% 12.42% 26.57% 9.20% 9.78% 7.05% 5.22% 1/31/1999
CEF Advisors Taxable Bond & BDC (MKT) 1.61% 13.11% 24.82% 10.19% 8.61% N/A 7.98% 12/30/2011
CEF Advisors All Sector Equity CEF (MKT) 1.82% 24.02% 42.69% 12.54% 12.99% N/A 11.13% 12/30/2011
CEF Advisors Debt-Focused BDC (MKT) 2.63% 34.51% 58.68% 11.42% 9.55% N/A 10.36% 12/30/2011
60/40 S&P 500/Barclays Bond 3.66% 12.02 18.91% 12.67% 11.80% 10.53% 6.38% 1/31/1999
CEF Advisors 60/40 Balanced (w/ BDCs) 1.71% 21.06% 37.94% 12.13% 11.71% N/A 10.64% 12/30/2011
CEF Advisors National Municipal Bond 2.36% 10.04% 17.67% 11.18% 5.53% N/A 6.65% 12/30/2011
Growth of $1,000,000 Invested CEFA's Globally Diversified Growth model on January 31, 1999*
Globally Diversified Growth $3,985,679
S&P 500 Total Return $5,609,477
Barclays Capital Global Agg Bond Total Return $2,452,584
60/40 S&P 500/Barclays Bond $4,045,406

Interested? Contact us today for more information and our brochure!

Direct: 804-288-2482
Toll-free: 1-800-356-3508 (U.S. and Canada)
E-mail: sales@CEFadvisors.com

*Disclosures: The net returns presented above for all of CEFA's composites were calculated on a time-weighted return basis. All dividends, interest and income, realized and unrealized gains and losses, brokerage and custodial fees are fully reflected. CEFA advisory fees are fully detailed in its ADV Part 2. CEFA composites include all actual fee-paying and non-fee-paying, fully discretionary accounts in this investment strategy that have been under CEFA management for at least three months.

Diversified Growth and Growth & Income Models: As of December 31, 2014, the percentage of non-fee-paying CEFA accounts in the Growth strategy was 11% and was 0% in the Growth & Income strategy. The inception date of this composite is December 31, 1998. As of January 1, 2014, these accounts are managed solely by John Cole Scott; he and CEFA founder, George Cole Scott, jointly managed the accounts from June 30, 2009 to December 31, 2013; and George Cole Scott solely managed the accounts from their inception to June 30, 2009.

Hybrid Income Model: As of December 31, 2014, the percentage of non-fee-paying CEFA accounts in this strategy was 0%. John Cole Scott has managed the accounts in this model since its inception on November 30, 2006.

International Opportunity: As of December 31, 2014, the percentage of non-fee-paying CEFA accounts in this strategy was 0%. The inception date of the International Equity composite (formerly called International Equity and International REIT) is October 31, 2002. As of January 1, 2014, these accounts are managed solely by John Cole Scott; he and CEFA founder, George Cole Scott, jointly managed the accounts from December 31, 2010 to December 31, 2014; and George Cole Scott solely managed the accounts from its inception to December 31, 2010.

Foundation Balanced, Conservative Diversified and Special Opportunities: As of December 31, 2014, the percentage of non-fee-payment CEFA accounts in this strategy is 0%. John Cole Scott has managed the accounts in these models since their inception: August 31, 2009, April 30, 2009 and May 31, 2013, respectively.

Managed Municipal Bond Closed-End Funds: As of December 31, 2014, the percentage of non-fee-paying CEFA accounts in this strategy is 0%. John Cole Scott has managed the accounts in this model since its inception on July 31, 2014.

Business Development Company ("BDC"): As of December 31, 2014, the percentage of non-fee-paying CEFA accounts in this strategy is 0%. John Cole Scott has managed the accounts in this model since its inception on December 31, 2014.

The results for individual accounts at different periods may vary. Investors should not rely on prior performance as a reliable indication of future results. These figures are unaudited and may be subject to change. The information provided should not be considered as a recommendation to buy or sell any particular security outside of a managed account. CEFA reserves the right to modify its current investment strategies and techniques based on changing market conditions or client needs. The S&P 500 and DJ World Stock (excluding U.S.) indices were calculated using total return analysis with dividends reinvested. These indexes have not been selected to represent an appropriate benchmark to compare an client's performance but rather is disclosed to allow for comparison of the client's performance to that of a certain well-known and widely recognized index.