KKR Income Opportunities Fund Declares Monthly Distributions of $0.1215 Per Share
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Insights
The announcement of KKR Income Opportunities Fund's monthly distributions is a critical piece of information for current and potential investors. The distribution rate of 11.66%, based on the current share price, is notably high and could be seen as a tempting yield in today's investment landscape. However, it's important to recognize that high distribution rates can sometimes signal higher risk or the return of capital rather than pure income generation.
Investors should be aware that the Fund's performance and the market's condition, which are subject to fluctuation, heavily influence distribution rates. The mention of possible capital gains distributions also suggests the Fund may be realizing profits from investments, but it could also indicate a return of capital, which isn't derived from investment income. It's crucial for investors to understand the distinction, as it impacts the tax treatment of distributions and the true economic gain from their investment.
Moreover, the Fund's NAV and market price dynamics are essential for assessing the true value of the investment. Closed-end funds like KIO often trade at a discount to their NAV, which can present opportunities but also additional risks. The Fund's investment strategy, fees and expenses should be carefully considered alongside its distribution announcements to gauge the overall investment quality.
For investors, the tax implications of the distributions from KKR Income Opportunities Fund are a significant consideration. The Fund's notice that distributions may include capital gains or return of capital, in addition to net investment income, impacts how these distributions are taxed. While net investment income is typically taxed at ordinary income rates, qualified dividends and long-term capital gains may benefit from lower tax rates.
A return of capital is not immediately taxed; instead, it reduces the investor's cost basis in the investment, potentially increasing the capital gains tax owed when shares are sold. The Fund's commitment to provide a Form 1099-DIV after the year-end for proper tax reporting is an important reminder for investors to wait for official tax documents before filing returns, as the estimates provided in notices are not for tax reporting purposes.
The Fund's announcement is an indicator of its current financial health and operational strategy. The distribution rate, especially when high, can attract new investors looking for regular income streams, potentially influencing the Fund's share price and demand. However, it's essential to analyze whether the Fund can sustain such distributions without eroding its capital base, especially in volatile market conditions.
Understanding the composition of the distributions is also crucial. If distributions are largely sourced from capital gains or return of capital, it might suggest the Fund is liquidating assets or returning principal to maintain its distribution rate, which could be unsustainable in the long term. Investors should consider the Fund's long-term growth prospects and the sustainability of its income sources when evaluating the attractiveness of the distribution rate.
The monthly distribution schedule is as follows for the months of January, February, and March:
Ex-Date: |
January 11, 2024 |
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Record Date: |
January 12, 2024 |
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Payable Date: |
January 31, 2024 |
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Ex-Date: |
February 15, 2024 |
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Record Date: |
February 16, 2024 |
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Payable Date: |
February 29, 2024 |
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Ex-Date: |
March 14, 2024 |
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Record Date: |
March 15, 2024 |
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Payable Date: |
March 29, 2024 |
Information regarding the distribution rate is included for informational purposes only and is not necessarily indicative of future results, the achievement of which cannot be assured. The distribution rate should not be considered the yield or total return on an investment in the Fund.
In compliance with Section 19 of the Investment Company Act of 1940, a notice will be provided to shareholders for any distribution that does not consist solely of net investment income. A portion of each distribution may be treated as paid from sources other than net investment income, including but not limited to short-term capital gains, long-term capital gains or return of capital.
The amounts and sources of distributions reported in this notice are only estimates and are not being provided for tax reporting purposes. The final determination of the source of all distributions in 2023 will be made after year-end. 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 is a diversified, closed-end fund. Investors should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing.
The investment return, price, yields, market value and net asset value (“NAV”) of a fund's shares will fluctuate with market conditions. Closed-end funds frequently trade at a discount to their NAV, which may increase an investor’s risk of loss. There is no assurance that the Fund will meet its investment objective. The Fund’s distribution rate may be affected by numerous factors, including changes in realized and projected market returns, Fund performance, and other factors. There can be no assurance that a change in market conditions or other factors will not result in a change in a Fund distribution rate at a future time.
An investment in the Fund is not appropriate for all investors and is not intended to be a complete investment program. The Fund is designed as a long-term investment and not as a trading vehicle. Investors should carefully review and consider the Fund’s investment objective, risk, charges and expenses before investing.
Investment return and principal value will fluctuate, and it is possible to lose money by investing in the Fund. Past performance is not a guarantee of future results.
Forward Looking Statements
This press release contains certain statements that may include "forward-looking statements" within the meaning of the federal securities laws. All statements, other than statements of historical fact, included herein are "forward-looking statements." The forward-looking statements are based on the Fund’s and KKR's beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Fund or KKR or are within their control. The Fund and KKR do not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law.
This document is not an offer to sell securities and is not soliciting an offer to buy securities in any jurisdiction where the offer or sale is not permitted. Investors should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing. An investment in the Fund should not constitute a complete investment program.
KKR Income Opportunities Fund
KKR Income Opportunities Fund is a diversified, closed-end management investment company managed by KKR Credit Advisors (US) LLC (“KKR Credit”), an indirect subsidiary of KKR & Co. Inc. (“KKR”). The Fund’s primary investment objective is to seek a high level of current income with a secondary objective of capital appreciation. The Fund will seek to achieve its investment objective by investing primarily in first- and second-lien secured loans, unsecured loans and high yield corporate debt instruments. It expects to employ a dynamic strategy of investing in a targeted portfolio of loans and fixed-income instruments of
About KKR Credit
Launched by KKR in 2004, KKR Credit invests on behalf of its managed funds, clients and accounts across the corporate credit spectrum, including secured credit, bank loans and high yield securities and alternative assets such as mezzanine financing, strategic investments and structured finance. With over 450 employees, including approximately 170 investment professionals, KKR Credit’s investment teams are closely aligned with KKR’s wealth of private equity investment and industry resources.
About KKR
KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.
Contact the Fund at (855) 330-3927 or visit the Fund’s website at https://www.kkrfunds.com/kio for additional information.
The Fund will invest in loans and other types of fixed‐income instruments and securities. Such investments may be secured, partially secured or unsecured and may be unrated, and whether or not rated, may have speculative characteristics. The market price of the Fund’s investments will change in response to changes in interest rates and other factors. Generally, when interest rates rise, the values of fixed‐income instruments fall, and vice versa.
Use of leverage creates an opportunity for increased income and return for Common Shareholders but, at the same time, creates risks, including the likelihood of greater volatility in the NAV and market price of, and distributions on, the Common Shares. In particular, leverage may magnify interest rate risk, which is the risk that the prices of portfolio securities will fall (or rise) if market interest rates for those types of securities rise (or fall). As a result, leverage may cause greater changes in the Fund’s NAV, which will be borne entirely by the Fund’s Common Shareholders.
Derivative investments have risks, including the imperfect correlation between the value of such instruments and the underlying assets of the Fund. The risk of loss from a short sale is unlimited because the Fund must purchase the shorted security at a higher price to complete the transaction and there is no upper limit for the security price. The use of options, swaps, and derivatives by the Fund has the potential to significantly increase the Fund’s volatility. In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. The Fund’s investments in securities or other instruments of non‐U.S. issuers or borrowers may be traded in undeveloped, inefficient and less liquid markets and may experience greater price volatility and changes in value.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231226670125/en/
Media
Julia Kosygina
212.750.8300
media@kkr.com
Source: KKR Income Opportunities Fund
FAQ
What is the annualized distribution rate announced by KKR Income Opportunities Fund (KIO)?
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What should investors consider before investing in KKR Income Opportunities Fund (KIO)?
