Clough Global Opportunities Fund Section 19(a) Notice
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Insights
The Clough Global Opportunities Fund's monthly distribution primarily consisting of a return of capital is a critical point for investors to consider. A return of capital indicates that the fund is not generating enough income or capital gains to cover the distributions and is instead returning investors' principal. This can be seen as a red flag, potentially indicating that the fund's investments are underperforming or that it is over-distributing. While this might temporarily bolster the yield that investors receive, it is not sustainable in the long run and could lead to a depletion of the fund's assets.
Furthermore, the report mentions a cumulative total return on NAV of 13.07% for the fiscal year-to-date, which seems promising. However, juxtaposing this with the 5-year average annual total return of 2.57% suggests variability in performance. Investors should be cautious and not solely rely on short-term performance when assessing the health of their investment.
It is also crucial to differentiate between the NAV performance and the market price of the fund's shares. While NAV reflects the value of the fund's assets, the market price can fluctuate based on supply and demand, which may not always correspond to the NAV. This discrepancy can lead to the fund trading at a premium or discount, an important consideration for investors looking at entry or exit points.
From a taxation perspective, the nature of the distributions is significant. The Fund's statement indicates that the distribution is largely a return of capital, which has different tax implications compared to distributions from income or capital gains. A return of capital is typically not taxed immediately as income; instead, it reduces the cost basis of the investment, potentially resulting in a higher capital gain (or lower capital loss) when the shares are eventually sold.
Investors should be aware that the Fund's tax reporting will be finalized only after the end of the fiscal year. Therefore, the estimates provided in the 19(a) Notice should not be used for tax reporting purposes. The Form 1099-DIV, which investors will receive, will contain the definitive information required for accurately reporting distributions for federal income tax purposes.
An investment strategist would examine the implications of the Fund's distribution composition for portfolio strategy. A distribution rate of 10.00% as a percentage of NAV might be attractive, but when the majority of that distribution is a return of capital, it suggests that the fund's current income and gains are insufficient to support such payouts. This could lead to a reassessment of the sustainability of the fund's distribution policy.
Investors should consider whether the Fund's strategy aligns with their investment goals, particularly if they are seeking income from their investments. If the Fund continues to return capital, it might be suitable for investors with a short-term horizon who are not reliant on the fund for income. However, for long-term income-focused investors, this could be a concern as it might impact the future income-generating ability of the Fund.
The Fund's past performance, as indicated by the 5-year average annual total return, should be contextualized with broader market performance and the performance of peer funds. This can provide investors with a benchmark to gauge whether the Fund's returns are competitive and aligned with market trends.
Statement Pursuant to Section 19(a) of the Investment Company Act of 1940
DENVER, CO / ACCESSWIRE / January 31, 2024 / On January 31, 2024, the Clough Global Opportunities Fund (NYSE American:GLO) (the "Fund"), a closed-end fund, paid a monthly distribution on its common stock of
The following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related rules adopted thereunder. The Fund estimates the following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
Current Distribution from: | ||||||||
| Per Share ($) | % | |||||||
Net Investment Income | 0.00056 | 1.17 | % | |||||
Net Realized Short-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Net Realized Long-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Return of Capital or other Capital Source | 0.04744 | 98.83 | % | |||||
Total (per common share) | 0.04800 | 100.00 | % | |||||
Fiscal Year-to-Date Cumulative Distributions from: | ||||||||
| Per Share ($) | % | |||||||
Net Investment Income | 0.00771 | 5.33 | % | |||||
Net Realized Short-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Net Realized Long-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Return of Capital or other Capital Source | 0.13689 | 94.67 | % | |||||
Total (per common share) | 0.14460 | 100.00 | % | |||||
The amounts and sources of distributions reported in this 19(a) Notice are only estimates and not for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with ‘yield' or ‘income.'
Presented below are return figures, based on the change in the Fund's Net Asset Value per share ("NAV"), compared to the annualized distribution rate for this current distribution as a percentage of the NAV on the last business day of the month prior to distribution record date.
Fund Performance & Distribution Information
| Fiscal Year to Date (11/01/2023 through 12/31/2023) | |||
Annualized Distribution Rate as a Percentage of NAV^ | 10.00 | % | |
Cumulative Distribution Rate on NAV^+ | 2.51 | % | |
Cumulative Total Return on NAV* | 13.07 | % | |
Average Annual Total Return on NAV for the 5 Year Period Ending 12/31/2023** | 2.57 | % | |
Past performance is not indicative of future results.
^ Based on the Fund's NAV as of December 31, 2023.
+Cumulative distribution rate is based on distributions paid to date for the period November 1, 2023 through January 31, 2024.
*Cumulative fiscal year-to-date return is based on the change in NAV including distributions paid and assuming reinvestment of these distributions and that all rights in the Fund's rights offering were exercised, for the period November 1, 2023 through December 31, 2023.
**The 5 year average annual total return is based on change in NAV including distributions paid and assuming reinvestment of these distributions and that all rights in the Fund's rights offering were exercised, as of the last business day of the month prior to the month of the current distribution record date.
While the NAV performance may be indicative of the Fund's investment performance, it does not measure the value of a shareholder's investment in the Fund. The value of a shareholder's investment in the Fund is determined by the Fund's market price, which is based on the supply and demand for the Fund's shares in the open market.
Shareholders should not draw any conclusions about the Fund's investment performance from the amount of this distribution or from the terms of the Fund's Managed Distribution Plan.
Furthermore, the Board of Trustees reviews the amount of any potential distribution and the income, capital gain or capital available. The Board of Trustees will continue to monitor the Fund's distribution level, taking into consideration the Fund's net asset value and the financial market environment. The Fund's distribution policy is subject to modification by the Board of Trustees at any time. The distribution rate should not be considered the dividend yield or total return on an investment in the Fund.
Contact Info:
Website: https://www.cloughcefs.com/
Email: cloughclientinquiries@paralel.com
SOURCE: Clough Global Opportunities Fund | GLO
View the original press release on accesswire.com
FAQ
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