First Trust Mortgage Income Fund Decreases its Monthly Common Share Distribution to $0.075 Per Share for September
First Trust Mortgage Income Fund (NYSE: FMY) has decreased its monthly common share distribution to $0.075 per share from $0.0825, payable on September 16, 2024. This represents a 9.09% reduction from the previous distribution. The new distribution rate is 6.98% based on the August 19, 2024 NAV of $12.89, and 7.23% based on the closing market price of $12.45.
The Fund's management believes this reduction will better align the distribution with the Fund's current earning potential while balancing its objectives of providing high income and preserving capital. FMY invests primarily in mortgage-backed securities and is managed by First Trust Advisors L.P., which has approximately $235 billion in assets under management as of July 31, 2024.
Il First Trust Mortgage Income Fund (NYSE: FMY) ha ridotto la sua distribuzione mensile delle azioni comuni a $0.075 per azione, rispetto a $0.0825, con pagamento previsto per il 16 settembre 2024. Questa rappresenta una riduzione del 9.09% rispetto alla distribuzione precedente. Il nuovo tasso di distribuzione è del 6.98% basato sul NAV del 19 agosto 2024 di $12.89, e del 7.23% basato sul prezzo di chiusura di mercato di $12.45.
La direzione del Fondo ritiene che questa riduzione allineerà meglio la distribuzione con il potenziale di guadagno attuale del Fondo, bilanciando al contempo gli obiettivi di fornire un alto reddito e preservare il capitale. FMY investe principalmente in titoli garantiti da mutui ed è gestito da First Trust Advisors L.P., che ha circa $235 miliardi di asset in gestione al 31 luglio 2024.
El First Trust Mortgage Income Fund (NYSE: FMY) ha reducido su distribución mensual de acciones comunes a $0.075 por acción desde $0.0825, que se pagará el 16 de septiembre de 2024. Esto representa una reducción del 9.09% respecto a la distribución anterior. La nueva tasa de distribución es del 6.98% basada en el NAV del 19 de agosto de 2024 de $12.89, y del 7.23% basada en el precio de cierre de mercado de $12.45.
La administración del Fondo considera que esta reducción alineará mejor la distribución con el potencial de ganancias actual del Fondo, al mismo tiempo que equilibrará sus objetivos de proporcionar altos ingresos y preservar el capital. FMY invierte principalmente en títulos respaldados por hipotecas y es gestionado por First Trust Advisors L.P., que tiene aproximadamente $235 mil millones en activos bajo gestión al 31 de julio de 2024.
퍼스트 트러스트 모기지 인컴 펀드 (NYSE: FMY)는 일반 주식의 월간 배당금을 $0.075로 $0.0825에서 감소시켰으며, 2024년 9월 16일에 지급될 예정입니다. 이는 이전 배당금에서 9.09% 감소한 것입니다. 새로운 배당률은 2024년 8월 19일 NAV가 $12.89 기준으로 6.98%, 시장 종가 $12.45 기준으로 7.23%입니다.
펀드 관리팀은 이번 감소가 펀드의 현재 수익 잠재력에 더 잘 맞도록 배당금을 조정하고, 높은 수익과 자본 보존이라는 목표를 동시에 달성할 수 있을 것이라고 믿고 있습니다. FMY는 주로 모기지 담보 증권에 투자하며, First Trust Advisors L.P.가 관리하고 있으며, 2024년 7월 31일 기준으로 약 2350억 달러의 자산을 관리하고 있습니다.
Le First Trust Mortgage Income Fund (NYSE: FMY) a réduit sa distribution mensuelle d'actions ordinaires à 0,075 $ par action, contre 0,0825 $, payable le 16 septembre 2024. Cela représente une réduction de 9,09% par rapport à la distribution précédente. Le nouveau taux de distribution est de 6,98% basé sur la NAV du 19 août 2024 de 12,89 $, et de 7,23% basé sur le prix de clôture de marché de 12,45 $.
La direction du Fonds estime que cette réduction alignera mieux la distribution avec le potentiel de gains actuel du Fonds tout en équilibrant ses objectifs de fournir un revenu élevé et de préserver le capital. FMY investit principalement dans des titres adossés à des hypothèques et est géré par First Trust Advisors L.P., qui gère environ 235 milliards de dollars d'actifs au 31 juillet 2024.
Der First Trust Mortgage Income Fund (NYSE: FMY) hat die monatliche Ausschüttung der Stammaktien auf $0.075 pro Aktie von $0.0825 gesenkt, zahlbar am 16. September 2024. Dies stellt eine Reduzierung von 9,09% im Vergleich zur vorherigen Ausschüttung dar. Der neue Ausschüttungssatz beträgt 6,98% basierend auf dem NAV vom 19. August 2024 von $12,89, und 7,23% basierend auf dem Schlusskurs von $12,45.
Das Management des Fonds ist der Ansicht, dass diese Reduzierung die Ausschüttung besser mit dem aktuellen Gewinnpotenzial des Fonds in Einklang bringen wird, während die Ziele einer hohen Einkommensgenerierung und des Kapitalschutzes gewahrt bleiben. FMY investiert hauptsächlich in hypothekenbesicherte Wertpapiere und wird von First Trust Advisors L.P. verwaltet, das zum 31. Juli 2024 etwa 235 Milliarden Dollar an verwalteten Vermögenswerten hat.
- Distribution rate remains relatively high at 6.98% based on NAV
- Fund aims to balance high income with capital preservation
- First Trust Advisors L.P. manages substantial assets of $235 billion
- 9.09% decrease in monthly distribution from $0.0825 to $0.075 per share
- Reduction suggests potential decline in Fund's earning potential
Insights
The 9.09% decrease in the monthly distribution from
The fund's focus on mortgage-backed securities exposes it to interest rate and credit risks, particularly relevant given recent market volatility and economic uncertainties. The mention of using leverage adds another layer of risk, potentially amplifying both gains and losses. Investors should closely monitor the fund's performance and risk management strategies in light of these factors.
The distribution cut reflects broader challenges in the mortgage-backed securities market. With the Federal Reserve's ongoing interest rate hikes and potential quantitative tightening, the yield curve dynamics are shifting, impacting the profitability of mortgage-related investments. This move by First Trust Mortgage Income Fund could be an early indicator of similar actions by other mortgage-focused funds.
The fund's assets under management of approximately
The fund's extensive risk disclosure is noteworthy, particularly the emphasis on market risks, interest rate sensitivity and the potential impacts of geopolitical events. This comprehensive approach to risk disclosure aligns with regulatory requirements and best practices in investor protection. The mention of LIBOR transition risks is particularly relevant, as it highlights ongoing challenges in the financial markets that could affect the fund's performance.
Investors should pay close attention to the statement that "a portion of this distribution may come from net investment income, net short-term realized capital gains or return of capital." This transparency is important for tax implications and understanding the true nature of the distributions. The final determination of the source and tax status of distributions at year-end is a standard practice that provides necessary clarity for investors' tax reporting.
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A portion of this distribution may come from net investment income, net short-term realized capital gains or return of capital. The final determination of the source and tax status of all distributions paid in 2024 will be made after the end of 2024 and will be provided on Form 1099-DIV.
In seeking to balance the Fund’s objectives of providing a high level of income while attempting to preserve capital, we believe a reduction in the distribution from
The Fund is a diversified, closed-end management investment company that seeks to provide a high level of current income. As a secondary objective, the Fund seeks to preserve capital. The Fund pursues these investment objectives by investing primarily in mortgage-backed securities representing part ownership in a pool of either residential or commercial mortgage loans that, in the opinion of the Fund's portfolio managers, offer an attractive combination of credit quality, yield and maturity.
First Trust Advisors L.P. ("FTA") is a federally registered investment advisor and serves as the Fund's investment advisor. FTA and its affiliate First Trust Portfolios L.P. ("FTP"), a FINRA registered broker-dealer, are privately-held companies that provide a variety of investment services. FTA has collective assets under management or supervision of approximately
Principal Risk Factors: Risks are inherent in all investing. Certain risks applicable to the Fund are identified below, which includes the risk that you could lose some or all of your investment in the Fund. The principal risks of investing in the Fund are spelled out in the Fund's annual shareholder reports. The order of the below risk factors does not indicate the significance of any particular risk factor. The Fund also files reports, proxy statements and other information that is available for review.
Past performance is no assurance of future results. Investment return and market value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. There can be no assurance that the Fund's investment objectives will be achieved. The Fund may not be appropriate for all investors.
Market risk is the risk that a particular investment, or shares of a fund in general may fall in value. Investments held by the Fund are subject to market fluctuations caused by real or perceived adverse economic conditions, political events, regulatory factors or market developments, changes in interest rates and perceived trends in securities prices. Shares of a fund could decline in value or underperform other investments as a result. In addition, local, regional or global events such as war, acts of terrorism, market manipulation, government defaults, government shutdowns, regulatory actions, political changes, diplomatic developments, the imposition of sanctions and other similar measures, spread of infectious disease or other public health issues, recessions, natural disasters or other events could have significant negative impact on a fund and its investments.
Current market conditions risk is the risk that a particular investment, or shares of the fund in general, may fall in value due to current market conditions. As a means to fight inflation, the Federal Reserve and certain foreign central banks have raised interest rates and expect to continue to do so, and the Federal Reserve has announced that it intends to reverse previously implemented quantitative easing. Recent and potential future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence in financial institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. Ongoing armed conflicts between
The debt securities in which the Fund invests are subject to certain risks, including issuer risk, reinvestment risk, prepayment risk, credit risk, interest rate risk and liquidity risk. Issuer risk is the risk that the value of fixed-income securities may decline for a number of reasons which directly relate to the issuer. Reinvestment risk is the risk that income from the Fund's portfolio will decline if the Fund invests the proceeds from matured, traded or called bonds at market interest rates that are below the Fund portfolio's current earnings rate. Prepayment risk is the risk that, upon a prepayment, the actual outstanding debt on which the Fund derives interest income will be reduced. Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and/or principal payments when due and that the value of a security may decline as a result. Interest rate risk is the risk that fixed-income securities will decline in value because of changes in market interest rates. Liquidity risk is the risk that illiquid and restricted securities may be difficult to value and to dispose of at a fair price at the times when the Fund believes it is desirable to do so.
A mortgage-backed security may be negatively affected by the quality of the mortgages underlying such security and the structure of its issuer. For example, if a mortgage underlying a particular mortgage-backed security defaults, the value of that security may decrease. Moreover, a downturn in the markets for residential or commercial real estate or a general economic downturn could negatively affect both the price and liquidity of privately issued mortgage-backed securities. A portion of the Fund's managed assets may be invested in subordinated classes of mortgage-backed securities. Such subordinated classes are subject to a greater degree of non-payment risk than are senior classes of the same issuer or agency.
To the extent a fund invests in floating or variable rate obligations that use the London Interbank Offered Rate ("LIBOR") as a reference interest rate, it is subject to LIBOR Risk. LIBOR has ceased to be made available as a reference rate and there is no assurance that any alternative reference rate, including the Secured Overnight Financing Rate ("SOFR"), will be similar to or produce the same value or economic equivalence as LIBOR. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain fund investments and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential effects of the transition away from LIBOR on a fund or on certain instruments in which a fund invests is difficult to predict and could result in losses to the fund.
Investments in asset-backed or mortgage-backed securities offered by non-governmental issuers, such as commercial banks, savings and loans, private mortgage insurance companies, mortgage bankers and other secondary market issuers are subject to additional risks.
The primary risks associated with the use of futures contracts are (a) the imperfect correlation between the change in market value of the instruments or indices underlying the futures contracts and the price of the futures contracts; (b) possible lack of a liquid secondary market for a futures contract and the resulting inability to close a futures contract when desired; (c) losses caused by unanticipated market movements, which are potentially unlimited; (d) the investment adviser's inability to predict correctly the direction of securities prices, interest rates, currency exchange rates and other economic factors; and (e) the possibility that the counterparty will default in the performance of its obligations.
If a security sold short increases in price, the Fund may have to cover its short position at a higher price than the short sale price, resulting in a loss.
Repurchase agreements are subject to the risk of failure. If the Fund's counterparty defaults on its obligations and the Fund is delayed or prevented from recovering the collateral, or if the value of the collateral is insufficient, the Fund may realize a loss.
Use of leverage can result in additional risk and cost, and can magnify the effect of any losses.
The risks of investing in the Fund are spelled out in the shareholder reports and other regulatory filings.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
The Fund's daily closing New York Stock Exchange price and net asset value per share as well as other information can be found at https://www.ftportfolios.com or by calling 1-800-988-5891.
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Source: First Trust Mortgage Income Fund
FAQ
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