Clough Global Equity Fund Section 19(a) Notice
- The Clough Global Equity Fund (NYSE American:GLQ) paid a monthly distribution of $0.0603 per share to shareholders.
- The distribution was estimated to be 100% return of capital or other capital source.
- The fund has distributed more than its income and net realized capital gains.
- The fiscal year-to-date cumulative distribution amount per share was 0.18010.
- The fund's NAV performance indicated a 14.54% cumulative total return on NAV for the period November 1, 2023 through December 31, 2023.
- None.
Insights
The Clough Global Equity Fund's recent distribution announcement highlights a 100% return of capital for the current distribution, which is a critical piece of information for investors. A return of capital indicates that the distribution is not derived from net income or realized capital gains but rather from the invested capital itself. This could suggest that the fund's investments are not generating enough income or gains to support distributions, which might raise concerns about the sustainability of future payouts. Investors should closely monitor this trend as it could impact the fund's share price if the pattern persists.
Additionally, the fund's annualized distribution rate of 9.99% relative to its net asset value (NAV) is significantly higher than its five-year average annual total return of 3.35%. This discrepancy suggests that the distributions might be inflating the yield, which could be misleading to investors seeking income-generating investments. It's important for investors to differentiate between high distribution rates and actual investment performance, as the latter is a more reliable indicator of a fund's health and long-term prospects.
For tax purposes, the distinction between income, realized capital gains and return of capital is critical. The Clough Global Equity Fund's notice clarifies that the current distribution is entirely a return of capital. This has tax implications because return of capital is not taxed immediately; instead, it reduces the cost basis of the investment, potentially resulting in higher capital gains when the shares are sold. Investors should be aware that while this may offer a short-term tax advantage, it could lead to a larger tax liability in the future.
It is also noteworthy that the fund's estimates for tax purposes are not final and may change based on its investment experience and tax regulations. Investors should be prepared for potential adjustments to their tax reporting once the fiscal year concludes and final tax documents are issued.
The performance data provided gives insight into the fund's recent operations. Notably, the cumulative total return on NAV of 14.54% for the fiscal year-to-date is robust and exceeds the fund's five-year average annual total return. This performance metric, which includes reinvested distributions, suggests that the fund's underlying investments have appreciated in value over the short term. However, this positive return contrasts with the 100% return of capital in the recent distribution, pointing to a possible disconnect between the fund's performance and its distribution strategy.
Investors should consider the fund's market price in relation to its NAV, as the market price reflects supply and demand dynamics and may diverge from the NAV. A persistent gap between the two could indicate market sentiment that does not align with the fund's reported performance metrics, which could influence investment decisions.
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 Equity Fund (NYSE American:GLQ) (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 | 0.00000 | 0.00 | % | |||||
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 | 0.06030 | 100.00 | % | |||||
Total (per common share) | 0.06030 | 100.00 | % | |||||
| Fiscal Year-to-Date Cumulative Distributions from: | ||||||||
| Per Share ($) | % | |||||||
Net Investment Income | 0.00378 | 2.10 | % | |||||
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 | 0.17632 | 97.90 | % | |||||
Total (per common share) | 0.18010 | 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^ | 9.99 % | |||||||||
Cumulative Distribution Rate on NAV^+ | 2.49 % | |||||||||
Cumulative Total Return on NAV* | 14.54 % | |||||||||
Average Annual Total Return on NAV for the 5 Year Period Ending 12/31/2023** | 3.35 % | |||||||||
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 Equity Fund | GLQ
View the original press release on accesswire.com
FAQ
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What was the fiscal year-to-date cumulative distribution amount per share for the Fund?
What was the cumulative total return on NAV for the Clough Global Equity Fund for the period November 1, 2023 through December 31, 2023?
What does the NAV performance indicate about the Fund's investment performance?
