Liberty All-Star® Growth Fund, Inc. Declares Distribution
- None.
- The distribution may be treated as paid from sources other than net income, including short-term capital gain, long-term capital gain, and return of capital. An investment in the Fund involves risk, including loss of principal.
Insights
The declaration of a $0.11 per share distribution by Liberty All-Star Growth Fund, Inc. (ASG) is a significant event for shareholders and potential investors. This distribution aligns with the Fund's policy of an annual 8 percent net asset value payout, reinforcing its commitment to providing consistent shareholder returns. The distribution's structure, potentially comprising income and capital gains, can affect investor tax obligations. The election option between reinvestment in shares or cash payout provides flexibility, addressing diverse investor preferences.
Investors should consider the impact of new share issuance on existing share value, as dilution could occur. However, the issuance at a price no less than 95% of market value serves as a safeguard against substantial dilution. The Fund's performance and the broader market's valuation of its assets will influence the attractiveness of this distribution and the subsequent share price.
It's crucial to note that the Fund's closed-end structure means it does not continuously issue shares, which can create liquidity constraints compared to open-end funds. The reliance on secondary market transactions for buying and selling shares introduces additional layers of market risk and price volatility. Investors should weigh these structural aspects when considering the Fund's distribution announcement and its potential impact on their investment strategy.
An analysis of the closed-end fund sector reveals that distributions, such as the one announced by Liberty All-Star Growth Fund, are a common mechanism to return capital to investors. However, the market's response to such announcements can vary based on the fund's performance, the perceived sustainability of the distribution policy and current market conditions. The Fund's net asset value of over $327 million positions it as a moderately-sized player in the industry.
Investors typically scrutinize the sources of distribution payments. Distributions paid from capital can signal a lack of sufficient income or realized gains, potentially raising concerns about long-term sustainability. However, a mix of income and gains, as indicated by ASG, is often seen as a positive sign of a balanced investment approach.
The timing and method of the declared distribution can also influence investor sentiment. Issuing shares at the lower of net asset value or market value, but safeguarded at a minimum 95% of market value, is designed to protect investors from excessive dilution while also potentially providing an attractive entry point for new investors if the market value is favorable.
For shareholders, the tax implications of Liberty All-Star Growth Fund's distribution are a critical consideration. The composition of the distribution—dividends, short-term capital gains, long-term capital gains, or return of capital—has different tax consequences. Qualified dividend income and long-term capital gains are generally taxed at lower rates than ordinary income and short-term capital gains, making the final determination of the distribution source highly relevant for tax planning.
The Fund's announcement that this determination will be made after year-end suggests that shareholders should prepare for potential tax liabilities that may not be immediately apparent. Shareholders participating in the Dividend Reinvestment Plan (DRIP) should also be aware that reinvested distributions are still subject to taxation, necessitating accurate tax reporting.
Given that the distribution may be paid in newly issued shares, shareholders electing this option should understand the tax basis of these shares, which will affect the calculation of capital gains or losses upon their eventual sale. This complexity underscores the importance of consulting with tax professionals to manage potential tax impacts effectively.
The distribution will be paid in newly issued shares to all shareholders except those who are not participating in Liberty All-Star Growth Fund's Dividend Reinvestment Plan and who elect to receive the distribution in cash. Shares will be issued at the lower of the February 16, 2024 net asset value per share or market value per share (but not less than
The Fund does not continuously issue shares and trades in the secondary market, investors wishing to buy or sell shares need to place orders through an intermediary or broker. The share price of a closed-end fund is based on the market's value. The Fund's shares are listed on the New York Stock Exchange under the ticker symbol ASG. ALPS Advisors, Inc. is the investment advisor of the Fund, a multi-managed, closed-end investment company with more than
Past performance cannot predict future results.
An investment in the Fund involves risk, including loss of principal.
Secondary market support provided to the Fund by ALPS Fund Services, Inc.'s affiliate ALPS Portfolio Solutions Distributor, Inc., a FINRA Member. ALPS Fund Services, Inc., ALPS Advisors, Inc. and ALPS Portfolio Solutions Distributor, Inc. are affiliated entities.
For Information Contact:
Liberty All-Star® Growth Fund, Inc.
1-800-241-1850
www.all-starfunds.com
View original content to download multimedia:https://www.prnewswire.com/news-releases/liberty-all-star-growth-fund-inc-declares-distribution-302028741.html
SOURCE Liberty All-Star Funds
FAQ
What is the distribution declared by Liberty All-Star Growth Fund, Inc. (NYSE: ASG)?
How much is the distribution in percentage of net asset value per year?
Where are the shares of Liberty All-Star Growth Fund, Inc. (NYSE: ASG) listed?
What are the risks associated with an investment in Liberty All-Star Growth Fund, Inc. (NYSE: ASG)?
