Saba Closed-End Funds ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the most expensive quintile among peers.  

 The strategy benefits from a notable effort from managers to align personal interests with shareholders by investing alongside them. This helps drive the team's Average People Pillar rating. The strategy earns an Average Process Pillar rating.  The strategy's parent organization is industry standard, albeit with some strong attributes like a bench of seasoned portfolio managers, but is held back by a disappointing average Morningstar Rating. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. Saba Closed-End Funds ETF earns an Average Process Pillar rating. The main contributor to the rating is the firm's five-year retention rate of 83% over the period. The stability of the management team also strengthens the process. Specifically, the fund has not seen a manager change in the last seven years. Lastly, the process is limited by high costs across its parent firm's funds, whose fees rank in their category's costliest quintile on average. While this fund's costs are most relevant to investors, the pattern at the broader firm suggests it could do more to keep costs down.

This strategy maintains a fixed-income to equity allocation very similar to Tactical Allocation peers, with a 31.3% to 49.3% fixed-income to equity weighting. Its equity sleeve has demonstrated a consistent bias to both smaller market-cap and value-oriented companies versus category peers. The strategy has three region or sector biases compared to category peers. The most noteworthy is a bias away from the healthcare sector, where the portfolio has been consistently underweight. Additionally, the portfolio has been underweight in the North America region. And finally, in the fund's most recent portfolio, less assets were allocated to emerging markets regions. Although, this bias has not existed over time. 

 The portfolio is overweight in energy and utilities relative to the category average by 17.9 and 6.7 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and technology, underweight the average by 7.8 and 6.9 percentage points of assets, respectively. The portfolio is not significantly overweight in any region compared to the category. The regions with low exposure compared to their category peers are North America and Japan, with North America underweight the average by 4.2 percentage points and Japan similar to the average.

 The fund’s bond allocation maintains higher interest rate risk as its average duration is 8.4 years compared with the category average of 4.6 years.

Average

Process

Saba Closed-End Funds ETF earns an Average People Pillar rating. The largest contributor to the rating is the stability of the management team. Specifically, the fund has not seen a manager change in the last seven years. The combined average five-year excess return of each manager also bolsters the rating. It indicates that the funds they manage have surpassed the average manager. Lastly, the rating is limited by the parent firm's five-year success ratio of 33%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.


Boaz Weinstein’s veteran status, with over 25 years of listed portfolio management experience, brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 4.0 stars, indicating that their risk-adjusted returns exceeded the category average. Although the team is small, it is a solid supporting cast. Together, the three listed managers boast more than an average of 13 years of listed portfolio management experience. The highest personal investment in the fund by any of its managers is between $100,000 and $500,000. That's on the low side--it would need to be more than $1 million for us to see the investment as sufficient to promote the strong alignment of their interests with the strategy's investors.

People

Saba Capital Management's track record as a steward is mixed, leading to an Average Parent Pillar rating. The experienced longest-tenured portfolio management at Saba Capital Management is a core advantage over global asset management peers. With 18 years of average tenure across the management group, it is clear they've been put through their paces. Looking at the firm's risk-adjusted performance, the product lineup compares similarly to competitors. Across its open-end and exchange-traded funds, the firm's average overall Morningstar Rating is 3.0 stars. Saba Capital Management open-end and exchange-traded products are priced, on average, among the highest quintile of similarly distributed strategies. This higher expense profile of its funds creates a larger performance hurdle and contributes negatively to Saba Capital Management's rating.

Parent

Saba Closed-End Funds ETF

CEFS is an actively managed fund-of-funds that seeks to generate high income by investing in closed-end funds trading at a discount to net asset value and hedging for duration risk.

Deutsche Strategic Municipal Income Trust

Nuveen Build America Bond Fund

Flaherty & Crumrine Preferred Income OpportunityFund Inc

Pimco Global Stockplus & Income Fund

Saba Capital Income & Opportunities Fund II

We take a look at the shape of the current CEF sell-off. The sell-off has followed a similar pattern to previous instances, with equity funds falling more than fixed-income funds, leveraged funds underperforming and discounts widening. Longer-duration assets may become more compelling as longer-term rates rise, and investors should consider adding them to their portfolios.

Dissecting The Current CEF Sell-Off And Opportunities

Saba Closed-End Funds ETF is an actively managed ETF of closed-end funds with a distribution rate of 8.53% and a portfolio of 98 CEFs. The fund has a flexible investment strategy but lacks transparency, combining fundamental and quantitative analysis. The fund has outperformed its competitors since inception, but the price and distributions have remained flat, resulting in a decay of inflation-adjusted value for shareholders.

CEFS: Good Relative To Peers, But Lagging Inflation

Calamos CEF Income & Arbitrage ETF

First Trust Income Opportunity ETF

Invesco CEF Income Composite ETF

VanEck CEF Municipal Income ETF 

YieldShares High Income ETF

While ETFs are traditionally passive products, active opportunities in the broader ETF market have been growing significantly over the past few years. Active ETFs of CEFs have historically had lower distribution rates than their passive counterparts.

Passive Vs. Active ETFs Of CEFs

Closed-end funds (CEFs) are relatively under the radar compared to peers like exchange-traded funds (ETFs) and mutual funds. Closed-end funds are generally desirable for two reasons: 1) high income; and 2) premium/discount mechanism.

Passive vs. Active ETFs of CEFs

Cornerstone Strategic Value Fund Inc

Cornerstone Total Return Fund Inc

Clough Global Opportunities Fund

Clough Global Equity Fund

Clough Global Dividend and Income Fund

OFS Credit Company Inc

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

RiverNorth Opportunities Fund, Inc.

RiverNorth Capital and Income Fund

abrdn, a UK-based fund manager, has been aggressively acquiring and merging closed-end funds aka CEFs from other managers to expand its offerings. CEFs have advantages over traditional dividend-paying stocks and offer a wide range of asset types and classes.

These 7 High-Yield CEFs Reduced Distributions In 2024, Consider Buying Anyway

Invesco CEF Income Composite ETF offers diversified exposure to income-producing closed-end funds with a strong 10.1% yield. Saba Closed-End Funds ETF has a stronger performance track record, due to savvy investment decisions and activist campaigns, making it my preferred choice over PCEF. An overview of PCEF, and a comparison to CEFS, follows.

Consider Selling PCEF And Buying CEFS Instead

Saba Capital, founded by Boaz Weinstein, has won industry awards and focuses on activism to close discounts in closed-end funds. The Saba Closed-End Funds ETF aims to generate high income and currently yields around 9%. CEFS has a history of solid positive returns and should outperform similar products in the future due to their very active approach.

CEFS: The Best Closed-End Funds To Buy For 2024

Cohen & Steers Closed-End Opportunity Fund

Cohen & Steers Closed-End Opportunity Fund takes a fund of closed-end funds approach, offering significant diversification. FOF is currently trading at a fairly elevated premium, which is unusual in looking at its history and indicates it is overvalued. Saba Closed-End Funds ETF could be a potential alternative for investors, as shares can be picked up at NAV while waiting for a better entry level for FOF.

FOF Is Richly Priced, CEFS Could Be An Alternative

The Saba Close-end Funds ETF engages in closed-end fund arbitrage by buying closed-end funds trading at a discount to NAV. Saba is also not afraid to get its hands dirty and engage in activist campaigns to improve funds' performance and close the NAV discounts. The CEFS ETF has delivered strong historical returns compared to passive closed-end fund-of-funds.

CEFS: Investing With Award-Winning Portfolio Managers

Saba Closed-End Funds ETF is a closed-end fund arbitrage strategy that seeks to provide high levels of income. CEFS has a high annual fund operating expense of ~2.9%, significantly higher than the average expense ratio for mutual funds and ETFs. The Fund has underperformed the S&P 500 since its launch in 2017 but has been significantly less volatile.

CEFS: Solid Performance But High Fees

Alerian MLP ETF

iShares iBoxx High Yield Corporate Bond ETF

iShares Core U.S. REIT ETF

ETFs Of CEFs: Diversification And Higher Distributions

Saba Closed-End Funds ETF outperforms other closed-end funds ETFs in both falling and rising interest rate environments. CEFS actively manages its portfolio to extract maximum shareholder value, including engaging in closed-end fund arbitrage. CEFS is currently engaged in a battle with BlackRock to switch certain closed-end funds to open end funds, potentially resulting in a gain for shareholders.

CEFS: Join Forces With Boaz Weinstein In His Battle With Blackrock

VanEck Vectors BDC Income ETF

First Trust Brazil AlphaDEX Fund

The last time I wrote about high-yield ETFs was in early July, when my focus was dividend ETFs whose yields were higher than the iShares Select Dividend ETF (NASDAQ: DVY ). At the time, that yield was 3.71%.

3 ETFs to Buy Yielding 10% or More

CEFS is a diversified fund of CEFs. The fund offers investors exposure to dozens of high-yield CEFs, yields 9.1%, and has outperformed. An overview of the fund follows.

CEFS: Diversified Fund Of CEFs, Strong 9.1% Yield, Strong Performance Track Record

Closed-end funds represent an interesting asset class for income-hungry investors. However, with thousands of these funds on the market today, selecting the right one is nearly as dizzying for ordinary investors as is stock picking.

Closed-End ETF Makes Life Easier on Income Investors

The Saba Closed-End Funds ETF is managed by Boaz Weinstein. CEFS provides income-oriented investors a diversified access to the closed-end fund universe.

CEFS: A Well-Managed, Well-Performing, And High-Yielding Closed-End Fund ETF

VettaFi's Associate Director of Research, Roxanna Islam, joined the Active Investment Company Alliance's The NAVigator podcast and host Chuck Jaffe to talk ETFs, and specifically, buying closed-end funds in the ETF wrapper.

VettaFi's Islam Talks Closed-End Funds ETFs on The NAVigator Podcast

Many investors are unfamiliar with the closed-end fund structure or uncomfortable with their premium/discount volatility. There are only a few options for ETFs of CEFs, but they are all very different strategies and may appeal to different types of investors.

Earning Income Through ETFs Of CEFs

Closed-end funds are known for their high distribution rate and potential to provide current income. But many investors are unfamiliar with their structure or uncomfortable with their premium/discount volatility.

Earning Income Through ETFs of CEFs

Saba Closed-End Funds ETF has a low assets under management of almost $96 million, but it takes large short positions, which enhances the amount of investible dollars. Saba Closed-End Funds ETF has been able to generate a strong yield on a consistent basis. It is also well diversified and thus can absorb the volatility of any particular stock or fund.

CEFS: This High-Yielding Fund Of Funds Has Become More Sustainable

PCEF and CEFS are two ETFs investing in a diversified portfolio CEFs. Although both funds have broadly similar strategies, holdings, and strong +8% yields, there are important differences between these.

PCEF Vs. CEFS: 2 Diversified Fund Of CEFs, 2 Strong +8.0% Yields, Both Buys

CEFS is trading at a premium, and generated an average total return of 6.4 percent over the past 5 years. Returns during the pandemic were positive, too. CEFS' high level of diversification into funds investing in fixed income securities, equities, and commodities reduces portfolio risk and volatility.

CEFS: High-Yielding Fully Diversified Income-Focused Fund Of Funds

CEFS invests in dozens of bond and equity CEFs, with exposure to thousands of securities. The fund yields 8.9%, has outperformed its peers since inception, and is partially hedged against rising rates as well.

CEFS: Diversified CEFs Exposure, Strong 8.9% Dividend Yield, Industry-Beating Returns

The Saba Closed-End Funds ETF is an "ETF of CEFs" with a +9% yield through a monthly distribution. The fund's actively managed strategy includes interest rate hedging which has helped mitigate market volatility this year.

CEFS ETF: High-Yield Income Strategy With An Interest Rate Hedging Kicker

CEFS invests in dozens of bond and equity CEFs, with exposure to thousands of securities. CEFS's holdings are comparatively safe, hedged against rising interest rates, and yield 8.4%.

News for Saba Closed-End Funds ETF ETF (CEFS)