Saba Closed-End Funds ETF's Average People Pillar and Process Pillar ratings aren't enough to prevent other weaknesses from sending this strategy to a Morningstar Medalist Rating of Negative. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the highest 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 gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in the healthcare sector and the North America region compared with category peers. To be considered a quality steward, this strategy's parent organization needs to improve factors like high fees and an unfavorable lineup success ratio. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. Saba Closed-End Funds ETF earns an Average Process Pillar rating. The leading factor in the rating is the stability of management across its parent firm. The firm's asset-weighted manager tenure of 21 years demonstrates its ability to retain portfolio managers. The stability of the management team also bolsters the rating. 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 highest-cost 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 expenses low.

This strategy maintains a fixed-income to equity allocation very similar to Tactical Allocation peers, with a 38.1% to 39.4% fixed-income to equity weighting. Its equity sleeve has a purposeful tilt to smaller market-cap stocks compared with category peers. Though from a style (value/growth) perspective, it is average. The strategy has three region or sector biases compared to category peers. The most notable is its consistent underexposure to the healthcare sector. Additionally, the strategy typically sustains an underweight bias to the North America region. And finally, in the fund's most recent portfolio, less assets were allocated to developed markets regions. Although, this bias has not existed over time. 

 The portfolio is overweight in energy and utilities relative to the category average by 26.9 and 8.5 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and technology, underweight the average by 7.5 and 7.3 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 Japan and North America; however, the allocations are only 1.4 percentage points and 0.9 percentage points underweight the average, respectively.

 The fund’s fixed-income allocation has higher interest rate risk as its average duration is 6.6 years compared with the category average’s 4.7 years.

Average

Process

Saba Closed-End Funds ETF earns an Average People Pillar rating. The most meaningful 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 suggests that the funds they manage have beat 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 outperformed their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.


The team is backed by Boaz Weinstein, the longest-tenured manager on the strategy, who provides over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they manage is 4.0 stars, demonstrating excellent risk-adjusted performance compared to category peers. Boaz Weinstein has an experienced backdrop of support. The three listed managers boast 13 years of average 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

In an increasingly competitive industry, Saba Capital Management falls behind on a number of key metrics, resulting in a Below Average Parent Pillar rating. Fees on the firm's open-end and exchange-traded funds are a weakness, contributing negatively to the rating and creating a larger performance hurdle on funds. On average, Saba Capital Management charges fees on its funds that are in the highest quintile of similarly distributed funds. With the current market environment of fee compression, this is cause for concern, as investors may flock over time to alternate asset managers to get a better deal.  Saba Capital Management has faced above-average manager turnover in the past five years. This is a concern, as long-term stability tends to support positive results.

Below Average

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.

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

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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

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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%.

CEFS: Strong 8.4% Distribution Yield, Market-Beating Returns

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We review CEF market valuation and performance through the second week of December and highlight recent market action.

CEF Weekly Market Review: Revisiting Resilient Core Themes

Most ETFs pick an asset class to meet their strategy. CEFS has income as their core focus but then invests across more than Fixed Income funds to achieve that mandate. Along with analyzing the Saba Closed-End Funds ETF, this article will compare that ETF with other investment choices that use the Fund-of-Fund approach.

CEFS ETF Provides Income-Focused FOF With Minor Exposure To Dividend-Enhanced CEFs Too

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What we call cross-credit CEFs are those that have relatively wide mandates across the corporate credit space - a feature we continue to find appealing. Their relatively wide mandates allow these funds wider allocation scope in order to deliver outperformance and more easily manage duration.

Cross-Credit CEFs Continue To Outperform

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The Net Asset Value (NAV) for a CEF remains, for me, a primary measure of its overall health.

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Investors can always use more income, and there exist several ETFs that are paying out over 7% in annual dividend yields. Dividend yield is a measure of how much of security's value is returned to shareholders in the form of dividends.

These ETFs Have Dividend Yields of 7%–Or Higher

Saba Capital has taken aim at the Voya funds. An analysis of possible future steps in the battle.

Activist Saba Vs. Sponsor Voya: The Battle Is On

Templeton Global Income Fund

Gurufocus insider data shows that Saba Capital Management LP, a hedge fund well known for its sophisticated credit strategies and closed-end fund expertise, is buying the Templeton closed-end bond fund, Templeton Global Income Fund (NYSE:GIM).

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