Lazard Global Total Return and Income Fund Declares Monthly Distribution and Issues Estimated Sources of the Distribution Announced in January
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Insights
The declaration of a monthly distribution by Lazard Global Total Return and Income Fund, Inc. is indicative of the fund's commitment to providing shareholders with regular income. The distribution policy is a critical aspect of the fund's appeal to income-focused investors. A financial analyst would scrutinize the distribution's sustainability by examining the source of the payout. In this case, the entire distribution is sourced from the return of capital rather than net income or capital gains, which could be a red flag. The return of capital indicates that the fund is not generating enough income or capital gains to cover the distributions and is instead returning investors' original investment capital.
Furthermore, the fund's average annual total return of 9.58% over five years juxtaposed with an annualized current distribution rate of 7.13% of NAV suggests that the fund has historically provided a robust total return. However, the negative cumulative total return for the fiscal year to date (-1.26%) raises questions about the fund's recent performance and whether the high distribution rate is sustainable without eroding the principal over time. Investors should consider the long-term impact of these distributions on the fund's net asset value (NAV) and whether the fund's investment strategy aligns with their income and growth objectives.
From a tax perspective, the nature of the distribution is paramount. Since the current and cumulative distributions for the fiscal year have been characterized entirely as a return of capital, it implies that these payments are not immediately taxable as income. Instead, they reduce the cost basis of the investment, potentially resulting in higher capital gains taxes when shares are sold. This could be advantageous for shareholders seeking to defer taxes or manage their taxable income.
However, it's crucial for shareholders to understand that a return of capital can alter the tax implications of their investment. Continuous return of capital distributions might lead to a situation where investors recover their entire cost basis, after which further distributions could be taxed as capital gains. Shareholders should consult with a tax advisor to understand the specific tax consequences of these distributions, especially if the return of capital is a significant portion of the total distributions received over time.
An investment strategist would evaluate the implications of the fund's distribution policy in the context of the current economic environment. The annualized distribution rate exceeding the cumulative total return suggests that the fund is distributing more than it earns, which might not be sustainable in the long run. This strategy could be part of a tactical approach to attract income-seeking investors during times of market volatility or low-interest rates. However, it may also signal that the fund's assets are being depleted faster than they are being replenished by investment income and realized gains.
Investors should consider the fund's performance in relation to its peers and the broader market. A comprehensive analysis would include an assessment of the fund's underlying investments, the management team's expertise and the overall strategy to determine if the current distribution policy is aligned with the fund's long-term growth prospects. An investment strategist would also examine the potential for capital appreciation within the fund's portfolio, which could offset the distributions sourced from the return of capital and provide a more balanced total return to shareholders.
The Fund will pay a previously declared distribution today, February 22, 2024. The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid, including today’s distribution, from the following sources: net investment income, net realized capital gains (short-term and long-term), and return of capital. All amounts are expressed per share of common stock and are based on accounting principles generally accepted in the US, which may differ from federal income tax regulations.
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Current Distribution |
% of the Current Distribution |
Total Cumulative Distributions for the Fiscal Year to Date |
% of the Total Cumulative Distributions for the Fiscal Year to Date |
Net Income |
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Net Realized Short-Term Capital Gains |
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Net Realized Long-Term Capital Gains |
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Return of Capital |
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Total |
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Average annual total return (in relation to NAV) for the 5-year period ending on January 31, 2024 |
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Annualized current distribution rate expressed as a percentage of NAV as of January 31, 2024 |
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Cumulative total return (in relation to NAV) for the fiscal year through January 31, 2024 |
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Cumulative fiscal year distributions as a percentage of NAV as of January 31, 2024 |
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You 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 Policy.
The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of your distribution may be 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."
The amounts and sources of distributions reported above are only estimates and are not being provided 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 provides financial intermediary firms the information necessary to produce the Form 1099-DIV, and then the relevant financial intermediary firm 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. If you have any questions, or need additional information, please call us at 1-800-823-6300.
Portfolio data as of January 31, 2024, including performance, asset allocation, top 10 holdings, sector weightings, regional exposure, and other Fund characteristics have been posted on Lazard Asset Management's ("LAM") website, www.LazardAssetManagement.com.
The Fund's investment objective is total return, consisting of capital appreciation and current income. The Fund's net assets are invested in a portfolio of approximately 60 to 80 US and non-US equity securities, including American Depository Receipts, generally of companies with market capitalizations greater than
An indirect subsidiary of Lazard Ltd (NYSE: LAZ), LAM, the Fund's investment manager, offers a range of equity, fixed-income, and alternative investment products worldwide. As of January 31, 2024, LAM and affiliated asset management companies in the Lazard Group managed
View source version on businesswire.com: https://www.businesswire.com/news/home/20240222523631/en/
Media:
Zoe Butt, +44 20 7448 2802
zoe.butt@lazard.com
Investor:
Ben Wulfsohn, +1 800 823 6300
ben.wulfsohn@lazard.com
Source: Lazard Global Total Return and Income Fund, Inc.
FAQ
What is the monthly distribution announced by Lazard Global Total Return and Income Fund, Inc. (LGI)?
When is the distribution payable to shareholders?
What percentage of the distribution constitutes return of capital?
What is the 5-year average annual total return for the fund?
What is the current distribution rate as a percentage of NAV as of January 31, 2024?
What is the cumulative total return for the fiscal year through January 31, 2024?
What percentage of NAV do the fiscal year distributions represent as of January 31, 2024?
