Lazard Global Total Return and Income Fund Declares Monthly Distribution and Issues Estimated Sources of the Distribution Announced in February
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Insights
The announcement by Lazard Global Total Return and Income Fund regarding its monthly distribution of $0.10459 per share represents a routine event for current shareholders. However, the detail that the entire distribution is classified as a return of capital is noteworthy. A return of capital indicates that the fund is not generating enough income or capital gains to cover the distributions and is instead returning part of investors' original investment. This can be an indicator of underperformance relative to the fund's objectives, which typically aim to provide income from dividends or interest and capital gains from investments.
From a financial analysis perspective, the fund's average annual total return of 9.76% over a five-year period is solid, but the annualized current distribution rate of 6.87% of NAV as of the end of February suggests that the distributions might be unsustainable if they exceed the fund's income and capital gains. Investors should be cautious as a consistent return of capital could erode the fund's asset base over time, potentially impacting long-term capital appreciation and income generation capabilities.
For shareholders, the classification of the entire distribution as a return of capital has tax implications. Unlike dividends or capital gains, a return of capital is not immediately taxable. Instead, it reduces the shareholder's cost basis in the investment, which can lead to a higher capital gain or a lower capital loss upon the sale of the shares. It's important for investors to understand these tax consequences and adjust their investment strategy accordingly. If the fund continues to distribute returns of capital, shareholders might face larger than expected capital gains taxes in the future when they sell their shares.
It is also critical for shareholders to keep accurate records of these distributions for tax-reporting purposes. The discrepancy between accounting principles and federal income tax regulations can lead to confusion, hence the need for clarity and proper documentation.
Examining the broader market context, the fact that Lazard Global Total Return and Income Fund's cumulative distributions are entirely from return of capital could be indicative of broader market conditions. For instance, if the market is experiencing low interest rates, funds that rely on income from fixed-income securities might struggle to generate high yields. Additionally, if the stock market is not performing well, capital gains might also be limited.
Investors often view regular distributions as a sign of a fund's health and performance. The fund's ability to maintain its distribution levels despite the challenging conditions could be seen as a positive by investors who prioritize steady cash flow. However, the sustainability of such distributions should be monitored closely, especially if market conditions do not improve.
The Fund will pay a previously declared distribution today, March 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.
|
Current Distribution |
% of the Current
|
Total Cumulative
|
% of the Total Cumulative
|
||
Net Income |
|
0 |
% |
|
0 |
% |
Net Realized Short-Term Capital Gains |
|
0 |
% |
|
0 |
% |
Net Realized Long-Term Capital Gains |
|
0 |
% |
|
0 |
% |
Return of Capital |
|
100 |
% |
|
100 |
% |
Total |
|
100 |
% |
|
100 |
% |
Average annual total return (in relation to NAV) for the 5-year period ending on February 29, 2024 |
9.76 |
% |
||||
Annualized current distribution rate expressed as a percentage of NAV as of February 29, 2024 |
6.87 |
% |
||||
Cumulative total return (in relation to NAV) for the fiscal year through February 29, 2024 |
3.09 |
% |
||||
Cumulative fiscal year distributions as a percentage of NAV as of February 29, 2024 |
1.15 |
% |
||||
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 February 29, 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 February 29, 2024, LAM and affiliated asset management companies in the Lazard Group managed
View source version on businesswire.com: https://www.businesswire.com/news/home/20240322916334/en/
Media contact:
Zoe Butt, +44 20 7448 2802
zoe.butt@lazard.com
Investor contact:
Ben Wulfsohn, +1 800 823 6300
ben.wulfsohn@lazard.com
Source: Lazard Global Total Return and Income Fund, Inc.
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