Highland Global Allocation Fund Declares Monthly Distributions of $0.081 Per Share
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Insights
The declaration of monthly distributions by Highland Global Allocation Fund represents a pivotal financial event for current and potential investors. The distribution rate, set at 8.5% of the Fund's net asset value (NAV), is a critical figure. This percentage provides insights into the Fund's performance and the income-generating ability of its investments. In comparison to industry averages, a distribution rate at this level could be considered attractive, particularly in a low-interest-rate environment, as it suggests a higher yield on investment.
However, investors should consider the sustainability of such distributions. A payout that significantly exceeds the fund's earnings might indicate a return of capital, rather than a return on capital, potentially eroding the fund's asset base over time. It is essential to analyze the Fund's earnings reports and the sources of distribution to assess whether the distributions are supported by actual earnings or are supplemented by capital, which could impact the long-term value of the Fund.
The Fund's decision to reset its annual distribution rate based on the average NAV per share for the final five trading days of the previous year is a strategic move that could influence investor sentiment. The market will likely respond to this announcement based on how the new distribution rate compares to peers and the broader market's performance. If the Fund's distribution is perceived as stable and reliable, it could attract income-focused investors, potentially increasing demand for the Fund's shares.
It is also important to monitor the market's reaction following the ex-dates of the distributions. The ex-date is the date on which the stock starts trading without the value of its next dividend payment, which typically results in a drop in the share price by an amount roughly equivalent to the dividend paid. Observing the Fund's share price behavior around these dates can provide insights into market expectations and the perceived strength of the Fund's distribution policy.
The following dates apply to the distributions declared:
Ex-Date | Record Date | Payable Date |
January 23, 2024 | January 24, 2024 | January 31, 2024 |
February 21, 2024 | February 22, 2024 | February 29, 2024 |
March 20, 2024 | March 21, 2024 | March 28, 2024 |
About the Level Distribution Policy
In March 2019, the Fund's Board of Trustees (the "Board") approved a level distribution policy (the "Level Distribution Policy") under which the Fund makes monthly distributions to stockholders at a constant and fixed (but not guaranteed) rate that will reset annually to a rate calculated based on the average of the Fund's NAV per share (the "Distribution Amount"), as reported for the final five trading days of the month preceding the announcement of distributions. The Distribution Amount applicable to Q1 2024 was reset based upon the results of the distribution rate calculation. The Distribution Amount applicable for future periods may be reset based upon the results of the distribution rate calculation.
There can be no guarantee that the Level Distribution Policy will be successful in its goals. The Fund's ability to maintain a stable level of distributions to shareholders will depend on a number of factors, including changes in the financial market, market interest rates, and performance of overall equity and fixed-income markets. As portfolio and market conditions change, the ability of the Fund to continue to make distributions in accordance with the Level Distribution Policy may be affected.
Shareholders have the option of reinvesting distributions in additional common shares through the Fund's Dividend Reinvestment Plan, or electing to receive cash by contacting AST, their financial adviser or their brokerage firm. Shareholders who wish to receive their distribution in cash must opt out of the Fund's Dividend Reinvestment Plan. For further information, shareholders should carefully read the description of the Dividend Reinvestment Plan in the prospectus.
The Board may amend the Level Distribution Policy, the Distribution Amount or distribution intervals, or the Fund may cease distributions entirely, at any time, without prior notice to shareholders. The announcement of, amendment to, or later termination of this Level Distribution Policy may have an adverse effect on the market price of the Fund's shares of common stock.
The Fund may at times, in its discretion, pay out less than the entire amount of net investment income earned in any particular period and may at times pay out such accumulated undistributed income in addition to net investment income earned in other periods in order to permit the Fund to maintain a stable level of distributions. As a result, the dividend paid by the Fund to shareholders for any particular period may be more or less than the amount of net investment income earned by the Fund during such period. The Fund intends to distribute all realized net long-term capital gains, if any, no more than once every twelve months.
To the extent that sufficient investment income is not available on a monthly basis, the Fund's distributions may consist of return of capital in order to maintain the distribution amount. A return of capital occurs when some or all of the money that shareholders invested in the Fund is paid back to them. A return of capital does not necessarily reflect the Fund's investment performance and should not be confused with 'yield' or 'income.' Any such returns of capital will decrease the Fund's total assets and, therefore, could have the effect of increasing the Fund's expense ratio. In addition, the Level Distribution Policy may require the Fund to sell its portfolio securities at a less than opportune time to meet the distribution amount.
Shareholders should not make any conclusions about the Fund's investment performance from the amount of the Fund's distributions or the Fund's Level Distribution Policy. With each distribution that does not consist solely of net investment income, the Fund will issue a notice to shareholders that will provide detailed information regarding the amount and composition of the distribution and other related information. The amounts and sources of distributions reported in the notice to shareholders are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the distributions for tax reporting purposes will depend upon the Fund's investment experience during its full fiscal year and may be subject to changes based on tax regulations. The Fund will send individual shareholders a Form 1099-DIV for each calendar year that will tell them how to report these distributions for federal income tax purposes. Please consult your tax advisor about any tax implications applicable to you in light of your particular circumstances.
About the Highland Global Allocation Fund
The Highland Global Allocation Fund ("HGLB") (NYSE: HGLB) is a closed-end fund managed by NexPoint Asset Management, L.P. For more information visit www.nexpointassetmgmt.com/global-allocation-fund.
About NexPoint Asset Management, L.P.
NexPoint Asset Management, L.P. is an SEC-registered investment adviser. It is the adviser to a suite of registered funds, including open-end mutual funds, closed-end funds, and an exchange-traded fund. For more information visit nexpointassetmgmt.com.
The distribution may include a return of capital. Please refer to the 19(a)-1 Source of Distribution Notice on the Highland Funds website for Section 19 notices that provide estimated amounts and sources of the fund's distributions, which should not be relied upon for tax reporting purposes.
No assurance can be given that the Fund will achieve its investment objectives.
Shares of closed-end investment companies frequently trade at a discount to net asset value. The price of the Fund's shares is determined by a number of factors, several of which are beyond the control of the Fund. Therefore, the Fund cannot predict whether its shares will trade at, below or above net asset value. Past performance does not guarantee future results.
Investors should consider the investment objectives, risks, charges and expenses of the Highland Global Allocation Fund carefully before investing. This and other information can be found in the Fund's prospectus, which may be obtained by calling 1-866-745-0264 or visiting www.nexpointassetmgmt.com. Please read the prospectus carefully before you invest.
CONTACTS
Investor Relations
Kristen Thomas
IR@nexpoint.com
Media Relations
Prosek Partners for NexPoint
Pro-nexpoint@prosek.com
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SOURCE Highland Global Allocation Fund
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