CPZ: Very Unique Strategy, But No Reason To Buy This Over An Index

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Calamos L/S Equity & Dynamic Inc. Trust offers a high level of current income with an 11.07% yield, higher than most equity-focused closed-end funds.The CPZ closed-end fund's recent performance has ...

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Trust offers a high level of current income with an 11.07% yield, higher than most equity-focused closed-end funds.The CPZ closed-end fund's recent performance has ...</p>\n\n<a href=\"https://seekingalpha.com/article/4680785-cpz-very-unique-strategy-but-no-reason-to-buy-this-over-an-index\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>CPZ: Very Unique Strategy, But No Reason To Buy This Over An Index</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCPZ: Very Unique Strategy, But No Reason To Buy This Over An Index\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-03-28 02:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4680785-cpz-very-unique-strategy-but-no-reason-to-buy-this-over-an-index><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Calamos L/S Equity & Dynamic Inc. Trust offers a high level of current income with an 11.07% yield, higher than most equity-focused closed-end funds.The CPZ closed-end fund's recent performance has ...</p>\n\n<a href=\"https://seekingalpha.com/article/4680785-cpz-very-unique-strategy-but-no-reason-to-buy-this-over-an-index\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"SDS","symbol_name":"两倍做空标普500ETF","start_time":0,"source_url":"https://seekingalpha.com/article/4680785-cpz-very-unique-strategy-but-no-reason-to-buy-this-over-an-index","article_id":"2422941479","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/182859721/image_182859721.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2422941479","pubTimestamp":1711562404,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Calamos L/S Equity & Dynamic Inc. Trust offers a high level of current income with an 11.07% yield, higher than most equity-focused closed-end funds.The CPZ closed-end fund's recent performance has be","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"SDS":"两倍做空标普500ETF","GOOGL":"谷歌A","AMZN":"亚马逊","SH":"标普500反向ETF","RGT":"ROYCE GLOBAL TRUST INC","EOD":"Wells Fargo Advantage Global D","SSO":"两倍做多标普500ETF","URTH":"iShares MSCI World Index Fund","ORCL":"甲骨文","PFF":"优先股指数ETF-iShares S&P","LGI":"LGI全球基金","BLK":"贝莱德","ACWI":"MSCI全球ETF-iShares","AGG":"债券指数ETF-iShares Barclays综合国债","SPXU":"三倍做空标普500ETF","ETG":"Eaton Vance Tax-Advantaged Globa","AGD.AU":"AUSTRAL GOLD LTD","CPZ":"CALAMOS L/S EQTY &#38; DYNMC INCOME TR","OEF":"标普100指数ETF-iShares","OEX":"标普100",".SPX":"S&P 500 Index","ASG.AU":"AUTOSPORTS GROUP LTD","LGI.AU":"LGI Ltd","SPY":"标普500ETF","IVV":"标普500指数ETF","AGD":"Alpine Global Dynamic Dividend Fund","ASG":"Liberty All-Star Growth Fund Inc","BLK.AU":"Blackham Resources Ltd","UPRO":"三倍做多标普500ETF","SPY.AU":"SPDR® S&P 500® ETF Trust","MSFT":"微软"},"translate_title":"CPZ：非常独特的策略，但没有理由在指数上买入","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ACWI":1,"URTH":1,"SPY.AU":1,"SPY":1,"RGT":1,"PFF":1,"ORCL":1,"MSFT":1,"LGI.AU":1,"LGI":1,"GOOGL":1,"ETG":1,"EOD":1,"CPZ":1,"AGD":1,"BLK.AU":1,"BLK":1,"ASG.AU":1,"AGD.AU":1,"ASG":1,"AMZN":1,"AGG":1,"US7Y.BOND":0.9,"US10Y.BOND":0.9,"US12M.BOND":0.9,"US2Y.BOND":0.9,"US30Y.BOND":0.9,"US3Y.BOND":0.9,"US5Y.BOND":0.9,"US6M.BOND":0.9,"US912797FH58.BOND":0.6,"US912797FS14.BOND":0.6,"US912797GB79.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6,"US912797HG57.BOND":0.6,".SPX":0.6,"US912797HH31.BOND":0.6,"US912796CX52.BOND":0.6,"UPRO":0.6,"SSO":0.6,"SPXU":0.6,"SH":0.6,"SDS":0.6,"OEX":0.6,"OEF":0.6,"IVV":0.6,"ESmain":0.6},"content_text":"Calamos L/S Equity & Dynamic Inc. Trust offers a high level of current income with an 11.07% yield, higher than most equity-focused closed-end funds.The CPZ closed-end fund's recent performance has been disappointing, with a decline of 23.72% over the past three years.The fund's long-short equity strategy focuses on the technology sector and has been betting against the S&P 500 Index, which has paid off in the past year. However, the fund's overall performance has been crushed by major indices.The fund failed to cover its distribution during its most recent full-year reporting period, but it seems to have been doing better since the market recovered in November.The fund is currently trading at a very attractive valuation, but it is difficult to make a case for it over an index fund.   haydenbird The Calamos L/S Equity & Dynamic Inc Trust (CPZ) is a rather unique closed-end fund aka CEF that some investors may wish to use in order to obtain a high level of current income. The fund certainly does well at this task of earning income, as its 11.07% current yield is quite a bit higher than just about any other equity-focused closed-end fund in the market. Morningstar classified this fund as an “Equity – Global Equity” fund, so let us see how its yield compares to that of a few other funds with the same classification:   Fund Name/Ticker Morningstar Classification Current Yield   Calamos Long/Short Equity and Dynamic Income Trust Equity-Global Equity 11.07%   Allspring Global Dividend Opportunity Fund (EOD) Equity-Global Equity 9.27%   Eaton Vance Tax-Advantaged Global Dividend Income Fund (ETG) Equity-Global Equity 6.63%   Lazard Global Total Return and Income Fund (LGI) Equity-Global Equity 7.70%   Royce Global Value Trust (RGT) Equity-Global Equity 1.42%   abrdn Global Dynamic Dividend Fund (AGD) Equity-Global Equity 8.17%   Click to enlarge As we can see here, the distribution yields of these funds are all over the place, which is not exactly surprising when investing in common equities. After all, different equities deliver different proportions of their total returns in the form of dividends, so equity yields are all over the place. However, many foreign markets do have higher yields than American markets partly because they were not bid up as aggressively over the past fifteen years. The higher yields that are available abroad naturally have an impact on the ability of these funds to generate income as opposed to relying entirely on capital gains. As we all know, dividends can be a somewhat more reliable source of investment profits over the long term because the capital gains delivered during any particular period tend to vary. A look at the recent performance of the Calamos Long/Short Equity and Dynamic Income Trust is likely to leave any investor very disappointed. As we can clearly see here, the shares of the fund have declined by 23.72% over the trailing three-year period:   Seeking Alpha The chart above shows the fund’s share price performance compared to that of the S&P 500 Index (SP500), the MSCI World Index (URTH), and the MSCI All-Countries World Index (ACWI). All three of these indices delivered respectable gains over the period, despite the difficulties of 2022 when all of the world’s central banks started tightening monetary policy. The Calamos Long/Short Equity and Dynamic Income Trust, meanwhile, declined over the same period. This will almost certainly cause many investors to simply walk away. This is even true for income-focused investors, who might be willing to accept a certain level of underperformance in exchange for income. However, a simple look at the share price performance of any closed-end fund does not reveal the whole story. As I have pointed out in numerous previous articles, closed-end funds such as the Calamos Long/Short Equity and Dynamic Income Trust typically pay most to all of their investment profits out to their shareholders via distributions. The basic goal is to give the investors all of the profits earned by the portfolio while keeping the actual size of the portfolio relatively stable. This is the reason why the yields on these funds can be higher than just about anything else in the market, as the combination of capital gains and dividends can be quite high from certain assets during certain periods. The distributions that are paid by these funds also represent real returns provided to the investors that are not reflected in the share price performance. As such, investors in any closed-end fund will ordinarily do much better than the share price performance would suggest. We therefore need to consider the fund’s distributions during any analysis of its performance. When we do that, we see that investors in the Calamos Long/Short Equity and Dynamic Income Trust actually gained 2.43% over the past three years when distributions are included:   Seeking Alpha As we can clearly see, this is still substantially worse than investors in the major domestic and foreign indices earned over the same period despite the significantly higher yield. In fact, an investor would have done better simply by putting their money into a money market fund or a high-yield savings account. However, at least an investment in this fund would not have lost money overall. As we are all well aware, the past performance of a fund is no guarantee of future results. As such, we should still have a closer look at the fund in order to determine whether buying it today makes any sense. This article will provide a closer look at this fund to aid in that decision. About The Fund According to the fund’s website, the Calamos Long/Short Equity and Dynamic Income Trust has the primary objective of providing its investors with a very high level of current income and risk-managed capital appreciation. This objective does work pretty well with the fund’s strategy, which is admittedly a very unusual one for a closed-end fund. The website provides a basic description of this strategy:   Calamos Investments This is not as detailed as we might like to see, but the fund’s fact sheet has an illustration that might prove helpful in determining exactly what this fund is doing:   Fund Fact Sheet We can see that the fund has two different segments, much like the three-segment approach of the Liberty All-Star Growth Fund (ASG). In this case, of course, both segments are run by the same fund manager. The fixed-income strategy segment is by far the easiest of the two to understand, as it simply invests the fund’s money into fixed-income securities issued by entities in both the United States and abroad. This segment of the fund’s portfolio is by far the smaller of the two segments, however. As of February 29, 2024, the fixed-income segment only accounts for 30.20% of the fund’s assets:   Calamos Investments We can see that the fund’s fixed-income assets are split between preferred equity and bonds, which is probably not a bad combination right now. After all, preferred equity tends to have higher yields than bonds, so the presence of these securities provides the fund with a higher level of income than it would earn if all 30.20% of its assets were invested in bonds. However, preferred stock theoretically has higher risk since preferred equity holders have to wait until the bondholders get paid during a liquidation or bankruptcy scenario. In addition, preferred stock can be more sensitive to interest rate movements. For example, the ICE Exchange-Listed Preferred & Hybrid Securities Index (PFF) declined by 22.00% in 2022 but the Bloomberg U.S. Aggregate Bond Index (AGG) only declined by 14.40%:   Seeking Alpha Thus, we can expect that the preferred stock held by this fund will benefit a bit more than its bond position in the event of interest rate cuts. The Bank of England, European Central Bank, Bank of Canada, and Federal Reserve have all stated their desire to reduce interest rates over the remainder of this year, although it is uncertain whether or not the Federal Reserve will actually be able to do this because of macroeconomic conditions in the United States. This fund is capable of investing all over the world, though, so American monetary policy is not the only thing that matters. A reduction of interest rates in another country will naturally have an impact on the preferred securities issued by corporate entities in that country. The fund’s long-short equity strategy position accounts for 69.8% of the fund’s portfolio and it is, unfortunately, a bit harder to understand. A long-short equity strategy is a technique that is employed by some hedge funds which is designed to reduce the overall risk of loss that is present with a long-only strategy. Investopedia explains a long-short strategy:  Long-short equity is an investing strategy that takes long positions in stocks that are expected to appreciate and short positions in stocks that are expected to decline. A long-short equity strategy seeks to minimize market exposure while profiting from stock gains in the long positions, along with price declines in the short positions. Although this may not always be the case, the strategy should be profitable on a net basis. The long-short equity strategy is popular with hedge funds, many of which employ a market-neutral strategy, in which dollar amounts of both long and short positions are equal.  The goal of the strategy is that the short positions will offset any losses in the long positions and overall the strategy will be profitable and not have the volatility of a portfolio that is only capable of going long. As asset management giant BlackRock (BLK) explains: Because long/short strategies rely less on upward markets, there is the potential for returns from both rising and falling prices. At the moment, the Calamos Long/Short Equity and Dynamic Income Trust appears to be focusing its equity strategy specifically on the technology sector. Here are the largest positions in the fund from each segment:   Calamos Investments The fund appears to be betting that Amazon.com (AMZN), Microsoft (MSFT), Alphabet (GOOGL), and Oracle (ORCL) will outperform the S&P 500 Index (SP500). As we can clearly see above, the bet appears to be specifically against the index, as its short weight vastly exceeds that of any other short position in the fund. That has actually been a pretty good bet over the past year. As we can see here, the S&P 500 Index represented by SPDR® S&P 500 ETF Trust (SPY) is up 30.85% over the past twelve months. All four of those major technology companies have outperformed it:   Seeking Alpha This has actually been a good overall bet by the fund’s management, despite the fact that it lost money from the index appreciating. The nice thing about this strategy is that the fund makes money as long as its long positions have a higher total return than the short positions. The fund is essentially able to profit from the difference in the performance of the two assets. At least for right now then, its largest bet seems to be paying off. Of course, we do not know exactly when the fund made the bet that we just discussed. It has a 210% portfolio turnover, which suggests that it engages in a substantial amount of trading activity. This is one of the downsides of a long/short equity strategy – it tends to be much more expensive than simply taking a long position and riding stocks for an extended period of time as an index exchange-traded fund does. We can certainly see this in the fund’s expense ratio, which sits at 3.81% right now:   Fund Fact Sheet There are many readers out there who are opposed to high expense ratios. Personally, I do not mind them if the fund’s performance after its expenses is reasonable. As we saw in the introduction though, this fund has not even come close to matching the performance of comparable indices over the past three years. With that said, it was doing okay until March 2023 so most of the underperformance has been over the past year. For example, here is the fund’s performance from the start of 2021 until the end of 2022:   Seeking Alpha We can see that on a total return basis, the fund beat both of the global indices and only barely trailed the S&P 500 Index. There were actually some times in 2021 and 2022 when this fund was beating even the S&P 500 Index on a trailing total return basis. Thus, the fund can sometimes do okay, but its history since its inception has been disappointing. The Calamos Long/Short Equity and Dynamic Income Trust has an inception date of November 29, 2019. Here is its total performance relative to the domestic and foreign indices since that time:   Seeking Alpha Overall, the fund has been crushed by the indices over its lifetime. While there have certainly been some periods in which it was doing pretty well, this history overall does not instill a lot of confidence in me that the fund will beat the index over an extended period. Leverage As is the case with most closed-end funds, the Calamos Long/Short Equity and Dynamic Income Trust employs leverage as a method of boosting the effective total returns that it earns from the assets in its portfolio. I explained how this works in many previous articles on other closed-end funds. To paraphrase myself:  In short, the fund borrows money and then uses that borrowed money to purchase common stocks, bonds, and other securities. As long as the purchased securities deliver a higher total return than the interest rate that the fund has to pay on the borrowed money, the strategy works pretty well to boost the effective total return of the portfolio. This fund is capable of borrowing money at institutional rates, which are considerably lower than retail rates. As such, this will usually be the case. It is, however, important to keep in mind that the use of leverage to boost returns is less effective today than it was a few years ago. This is because today’s higher borrowing rates mean that the difference between the possible returns that can be earned from the purchased assets and the interest rate that the fund has to pay on the borrowings is much narrower than when interest rates were basically 0%. The use of debt in this fashion is a double-edged sword. This is because leverage boosts both gains and losses. As such, we want to ensure that the fund is not employing too much leverage because that would expose us to an outsized level of risk. I generally do not like a fund’s leverage to exceed a third as a percentage of its assets for this reason.  As of the time of writing, the Calamos Long/Short Equity and Dynamic Income Trust has leveraged assets comprising 25.67% of its portfolio. This is below the one-third of assets level that we would ordinarily consider to be acceptable for an equity fund. Here is how it compares to its peer group:   Fund Current Leverage   Calamos Long/Short Equity and Dynamic Income Trust 25.67%   Allspring Global Dividend Opportunity Fund 18.00%   Eaton Vance Tax-Advantaged Global Dividend Income Fund 19.80%   Lazard Global Total Return and Income Fund 30.20%   Royce Global Value Trust 5.08%   abrdn Global Dynamic Dividend Fund 0.00%   Click to enlarge As we can see, the Calamos Long/Short Equity and Dynamic Income Trust does not appear to be excessively leveraged relative to its peers, although it is a bit higher than many of them. As such, we probably do not need to worry too much about the fund’s leverage right now. Distribution Analysis As mentioned earlier in this article, the primary objective of the Calamos Long/Short Equity and Dynamic Income Trust is to provide its investors with a very high level of current income. In pursuance of this objective, the fund currently has approximately 30% of its assets invested in fixed-income securities such as preferred stock and bonds. This provides the fund with a certain level of income, although this is still a minority position in the overall portfolio. The primary way through which the fund will achieve its objective is via a long-short equity strategy, which would primarily be producing capital gains. The fund’s very high turnover rate suggests that it will be realizing capital gains pretty often. The fund pools together the money that it receives from these various sources and pays it out to its shareholders, net of its expenses. When we consider that the fund is realizing capital gains fairly often and it is using leverage to boost its overall returns, we can assume that its shares will have a fairly high distribution yield. This is indeed the case, as the Calamos Long/Short Equity and Dynamic Income Trust pays a monthly distribution of $0.1400 per share ($1.68 per share annually), which gives it an 11.07% yield at the current share price. As we saw earlier in this article, this is quite a bit higher than most of this fund’s peers. This fund has also been remarkably consistent with respect to its distribution since its inception. As we can see here, the fund has been growing its distribution over the past half-decade or so with no cuts:   CEF Connect This is a distribution history that will likely appeal to those investors who are seeking to receive a safe and secure income from the assets in their portfolios. However, the fact that the fund’s net asset value has declined by 11.83% since its inception suggests that it might be distributing more than it can actually afford:   Barchart We generally do not want to see a fund’s net asset value decline over time since that may suggest that the fund is returning the principal to its investors. This is not sustainable over any sort of extended period. As such, we should have a closer look at the fund’s finances in order to determine how sustainable its current distribution is likely to be. Fortunately, we do have a relatively recent document that we can consult for the purposes of our analysis. As of the time of writing, the most recent financial report for the Calamos Long/Short Equity and Dynamic Income Trust corresponds to the full-year period that ended on October 31, 2023. As such, it will not include any information about the fund’s performance over the past six months. However, the global equity markets have been fairly strong since the start of November and the fund has probably been able to take advantage of this. Indeed, we can see above that its net asset value has been increasing since the end of October, so things have probably been better for the fund than they were during the period of time discussed in this report. For the full-year period, the Calamos Long/Short Equity and Dynamic Income Trust received $8,655,125 in interest along with $5,522,378 in dividends. Some of this received interest was classified as amortization of principal and so is not considered to be investment income. The fund also had to pay some money in foreign withholding taxes, which are deducted from its dividends. Finally, it had $6,494,633 in other income that brings its total investment income for the period to $20,522,882. The fund paid its expenses out of this amount, which left it with $4,692,577 available to shareholders. That was, expectedly, nowhere close to enough to cover the distributions that the fund paid out over the period. The Calamos Long/Short Equity and Dynamic Income Trust paid out $32,982,086 to its shareholders over the full-year period. At first glance, this could be quite concerning as this fund clearly did not have sufficient investment income to cover the distributions that it paid out. However, there are other methods through which the fund can obtain the money that it requires to cover its distributions. In particular, the equity portion of the fund’s portfolio might generate a significant amount of capital gains. Realized capital gains are not included in net investment income for accounting or tax purposes, but they do represent money coming into the fund that can be distributed to its shareholders. The fund had mixed success at earning money via these alternative sources during the period. It reported net realized gains of $22,502,178 but these were partially offset by $16,183,025 net unrealized gains. Overall, the fund’s net assets declined by $21,970,356 after accounting for all inflows and outflows during the period. Thus, the fund failed to cover its distributions during the full-year period. Fortunately, it does appear that things have improved for the fund since the end of the reporting period. This chart shows the fund’s net asset value per share since October 31, 2023:   Barchart As we can clearly see, the fund’s net asset value per share has appreciated by 6.90% since the end of the reporting period. This tells us that the fund has managed to fully cover all of the distributions that it has paid since that date with some money left over. This is a good sign, and it suggests that the fund can probably sustain its current distribution as long as the market maintains the strength that we have seen over the past five months. There is no guarantee that this will be the case though, particularly since there is a very real possibility that the Federal Reserve will be unable to cut interest rates due to accelerating inflation. Valuation As of March 26, 2024 (the most recent date for which data is available as of the time of writing), the Calamos Long/Short Equity and Dynamic Income Trust has a net asset value of $17.67 per share but the shares currently trade for $15.12 each. This gives the fund’s shares a 14.43% discount on net asset value at the current price. This is an extraordinarily large discount for any closed-end fund, although it is not quite as good as the 15.03% discount that the shares have had on average over the past month. As I have suggested in various previous articles, a double-digit discount to net asset value is generally representative of a decent entry price for any closed-end fund. As such, the current price looks pretty reasonable if you wish to add this fund to your portfolio. Conclusion In conclusion, the Calamos Long/Short Equity and Dynamic Income Trust is a rather unique closed-end fund that employs a long-short equity strategy that is not often seen outside of the hedge fund world. While this strategy can theoretically offer attractive profits in any market conditions, this fund has dramatically underperformed both the S&P 500 Index and MSCI World Indices during many market periods. It is difficult to see anything on the horizon that will change that situation. As such, I cannot see any real reason to purchase this fund instead of an index exchange-traded fund.  Editor's Note: This article covers one or more microcap stocks. 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