Clough Global Equity Fund Section 19(a) Notice
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Insights
The Clough Global Equity Fund's recent distribution notice indicates a significant portion of the payment to shareholders (93.86% for the current distribution) is derived from a return of capital rather than net investment income or realized capital gains. This is a critical point for current and potential investors, as it suggests the Fund may be returning a portion of investors' original capital rather than distributing returns generated from its investment activities. Such a high return of capital percentage could imply that the Fund's underlying investments are not generating sufficient income or gains, which might be a red flag regarding the Fund's current performance and sustainability of distributions.
Another point of concern is the comparison between the Fund's cumulative total return on net asset value (NAV) of 9.63% and the five-year average annual total return of just 0.35%. This disparity may indicate volatility or inconsistency in the Fund's performance over time. Investors often seek funds with stable and consistent returns, so this might influence their perception of the Fund's attractiveness. Additionally, the annualized distribution rate as a percentage of NAV at 10.27% juxtaposed with a cumulative distribution rate on NAV of 1.71% for the fiscal year-to-date further complicates the picture for investors trying to assess the Fund's performance relative to its distributions.
From a taxation perspective, the nature of the distributions is particularly important. The Fund's notice clarifies that the estimated amounts and sources of distributions are not for tax reporting purposes and that actual amounts for tax purposes will depend on the Fund's investment experience for the remainder of the fiscal year. Shareholders should be aware that distributions that are classified as a return of capital are not taxed as income in the year they are received. Instead, they reduce the cost basis of the investment, potentially resulting in higher capital gains taxes when the shares are sold. It is essential for shareholders to understand the tax implications of these distributions, particularly if a significant portion is a return of capital, as it could affect their investment strategy and tax planning.
For long-term investors, understanding the composition of the Fund's distributions is crucial. The Fund's reliance on return of capital for the bulk of its distributions could indicate that it is not generating enough from its investments to sustain the payouts, which might lead to concerns about the erosion of capital over time. While the Fund's past performance, as indicated by its NAV, has seen some positive returns, investors should be cautious about extrapolating past performance into the future. The Fund's performance should be evaluated in the context of market conditions, the Fund's investment strategy and risk tolerance levels of the individual investor. The Fund's strategy of potentially returning capital to sustain distributions might be suitable for some investors seeking immediate cash flow, but it may not align with the goals of those looking for capital growth or income strictly from investment earnings.
DENVER, CO / ACCESSWIRE / December 29, 2023 / On December 29, 2023, 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 ($) | % | |
| Net Investment Income | 0.00368 | |
| Net Realized Short-Term Capital Gain | 0.00000 | |
| Net Realized Long-Term Capital Gain | 0.00000 | |
| Return of Capital or other Capital Source | 0.05622 | |
| Total (per common share) | 0.05990 | |
| Fiscal Year-to-Date Cumulative Distributions from: | ||
Per Share ($) | % | |
| Net Investment Income | 0.00378 | |
| Net Realized Short-Term Capital Gain | 0.00000 | |
| Net Realized Long-Term Capital Gain | 0.00000 | |
| Return of Capital or other Capital Source | 0.11602 | |
| Total (per common share) | 0.11980 |
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 11/30/2023) | ||||
| Annualized Distribution Rate as a Percentage of NAV^ | ||||
| Cumulative Distribution Rate on NAV^+ | ||||
| Cumulative Total Return on NAV* | ||||
| Average Annual Total Return on NAV for the 5 Year Period Ending 11/30/2023** | ||||
Past performance is not indicative of future results.
^ Based on the Fund's NAV as of November 30, 2023.
+Cumulative distribution rate is based on distributions paid to date for the period November 1, 2023 through December 31, 2023.
*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 November 30, 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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