Market and Economic Backdrop
September has been a month of mixed signals across global markets. Inflation remains sticky, with shelter, services, and insurance costs continuing to put upward pressure on consumer prices. The Federal Reserve has signaled patience but has not yet delivered the long-anticipated rate cuts. Long-term Treasury yields remain volatile, reflecting both supply concerns and shifting expectations for growth and inflation. Equity markets moved in fits and starts, weighed down by tariff headlines, political noise, and uneven corporate earnings.
Credit markets, meanwhile, experienced modest spread widening. Investment-grade corporate bonds remain relatively stable, but high yield and leveraged loans have seen choppier price action as investors weigh default risk against attractive yields. Mortgage markets continue to wrestle with elevated financing costs, while real assets such as energy infrastructure and royalties remain firm sources of income. Against this backdrop, the Easy Income Portfolio continues to provide attractive yield and diversification, with each holding contributing its own role in balancing income, risk, and long-term resilience.
StoneCastle Financial – (Ticker: BANX)
BANX invests in community bank subordinated debt and regulatory capital relief securities, providing exposure to a niche corner of the financial sector. Spreads have held firm despite market volatility, and credit quality in the bank sector has been more resilient than feared. While community banks face growth headwinds, capital ratios remain strong, and BANX's dividend coverage is solid.
Nuveen Real Asset Income and Growth Fund – (Ticker: JRI)
JRI offers a diversified portfolio across infrastructure, REITs, and credit. The fund trades at a discount to NAV, giving investors additional yield pickup. Real asset allocations continue to provide some inflation protection, though higher rates remain a headwind for real estate. The dividend remains well covered by cash flow from credit holdings.
iShares Mortgage Real Estate ETF – (Ticker: REM)
REM's exposure to mortgage REITs has been pressured by higher-for-longer rates, which squeeze spreads between funding and asset yields. Dividends remain high, though volatility is elevated. Mortgage spreads remain wide enough to support income, but price performance will remain choppy until rates stabilize.
Virtus InfraCap U.S. Preferred Stock ETF – (Ticker: PFFA)
PFFA has been a steady performer, benefitting from resilient preferred stock spreads. Bank and utility preferreds, in particular, have held up better than high yield corporate bonds. Coverage remains strong, and the portfolio continues to throw off consistent income, even if rate volatility pressures prices.
Special Opportunities Fund – (Ticker: SPE)
SPE remains one of the more eclectic closed-end funds, with exposure to opportunistic income investments. The fund trades at a discount, and its dividend is supported by a combination of credit, equities, and special situations. While choppier than peers, SPE provides differentiated returns and complements the portfolio's more traditional credit holdings.
PIMCO Enhanced Low Duration Active ETF – (Ticker: BNDS)
BNDS has delivered stable returns despite market volatility, thanks to its focus on short-duration credit. In a high-rate environment, low-duration strategies have provided a defensive yield option. With rates elevated, BNDS is an important anchor in the portfolio's credit allocation.
Angel Oak Financial Strategies Income Term Trust – (Ticker: FINS)
FINS provides exposure to structured credit, including bank debt and preferreds. The fund has weathered volatility in financials well, with solid dividend coverage. Elevated yields and strong credit structures support the long-term income profile.
Dorchester Minerals, L.P. – (Ticker: DMLP)
DMLP benefits directly from energy royalties, and with oil and natural gas demand steady, distributions remain strong. Energy prices have been volatile, but royalty cash flows are linked to production levels, which remain resilient. DMLP continues to offer inflation-resistant income with no debt on the balance sheet.
Abrdn Asia-Pacific Income Fund – (Ticker: FAX)
FAX holds Asian government and corporate debt, offering diversification outside the U.S. market. Currency pressures, especially in China and emerging Asia, weighed on returns, but dividends remain steady. Global diversification remains a modest drag this month but provides valuable income balance.
Simplify MBS ETF (Ticker: MTBA)
MTBA invests in mortgage-backed securities, where spreads remain attractive and convexity risks are less threatening than in past cycles. The MBS market continues to offer high income, though rates remain the key driver of price performance. For the portfolio, MTBA provides steady cash flows with defensive credit exposure.
WisdomTree Alternative Income Fund – (Ticker: HYIN)
HYIN invests in alternative credit, including private debt and specialty income streams. Yields remain elevated, and the fund benefits from wide spreads across private credit. Defaults are edging higher, but recoveries remain strong. The fund offers income that is less correlated with traditional bond markets.
Saba Closed-End Funds ETF – (Ticker: CEFS)
CEFS focuses on capturing discounts in closed-end funds. With CEF discounts wide across the market, CEFS remains an attractive way to play mean reversion. The fund generates consistent income and benefits from tactical management of credit and equity CEF holdings.
SPDR Blackstone Senior Loan ETF (Ticker: SRLN)
SRLN provides floating-rate exposure through senior secured loans. Higher-for-longer rates continue to support strong cash flows, even if credit spreads have widened modestly. Senior loans remain attractive for income, and SRLN plays a defensive role in the portfolio's credit allocation.
Tortoise Energy Infrastructure Fund – (Ticker: TYG)
TYG offers exposure to midstream energy infrastructure, where cash flows remain insulated from commodity volatility. Long-term contracts and strong demand for natural gas and liquids transport support steady dividends. With energy transition trends and AI-driven power demand increasing natural gas usage, the long-term outlook remains favorable.
VanEck BDC Income ETF – (Ticker: BIZD)
BIZD provides exposure to business development companies, which remain a bright spot. BDCs have reported strong net investment income and maintained or increased dividends. Lending terms remain favorable, spreads are wide, and while defaults are rising modestly, recoveries remain high. The sector continues to offer double-digit yields.
Outlook
The Easy Income Portfolio remains well positioned for this stage of the cycle. Rates are high, spreads are fair, and economic growth is slowing but not collapsing. Our allocations to preferreds, BDCs, structured credit, and real assets provide a blend of income and resilience, while floating-rate and short-duration exposures hedge against continued rate volatility. Markets are noisy, but income remains steady — and for Easy Income investors, the checks keep clearing.
Boaz Weinstein, Saba Capital, and the Closed-End Fund Playbook
Boaz Weinstein grew up in New York City with a mind tuned to strategy. By his teens, he had already achieved the rank of National Master in chess, a sign of the analytical skill and competitive drive that would shape his career in finance. After graduating from Stuyvesant High School, he studied philosophy at the University of Michigan, a background that sharpened his ability to question assumptions and probe systems of thought.
Weinstein began his career on Wall Street in the 1990s and quickly gravitated toward the then-emerging world of credit derivatives. At Deutsche Bank he made his mark as a master of capital-structure arbitrage—trading across an issuer's debt and equity securities to exploit mispricing's. His rapid rise culminated in running one of the bank's proprietary trading desks before he struck out on his own.
In 2009 he founded Saba Capital Management, bringing with him many of the traders who had worked alongside him at Deutsche. From the beginning, Saba was designed to thrive in complexity, with a core focus on credit markets, derivatives, and arbitrage. Yet over time the firm became best known for a strategy that seemed almost old-fashioned compared to the exotic trades Weinstein had once pioneered: activism in closed-end funds.
Closed-end funds are a peculiar corner of the investment world. They raise a fixed amount of capital, trade on exchanges like stocks, and often find themselves priced by the market at a discount or premium to the value of their underlying portfolios. Those discounts can persist for years, driven not by the quality of the assets but by sentiment, liquidity, or simple neglect. To Weinstein, those inefficiencies were an invitation.
Saba's approach is straightforward in theory but demanding in practice. The firm hunts for closed-end funds trading at significant discounts to their net asset value. Buying at those levels creates a margin of safety, but Weinstein rarely stops there. Saba often presses for change—urging boards to buy back shares, launch tender offers, or even convert funds into open-ended vehicles that allow investors to redeem at full value. Where persuasion fails, Saba is not afraid to engage in proxy battles, litigation, or public campaigns to rally shareholders.
The strategy combines patience with confrontation. Discounts do not close overnight, and many managers resist change, protecting fee streams and entrenched boards. But Weinstein has shown a willingness to wait, to build positions, and to use every tool available to unlock value. The results have been tangible. High-profile campaigns against some of the largest fund families in the world have led to negotiated buybacks near net asset value and created real gains for shareholders who might otherwise have been stuck in perpetually discounted vehicles.
What makes Saba's closed-end fund strategy distinctive is the fusion of two worlds. On one hand, it carries the DNA of an arbitrageur, treating discounts to net asset value as mispricing's to be exploited. On the other, it borrows from the activist playbook, insisting that shareholder rights matter and that structures should serve investors rather than managers. The combination has turned Weinstein into one of the most visible forces in this once sleepy corner of the market.
Today Saba Capital is recognized not only for its roots in credit trading but also as a leading voice in closed-end fund activism. Weinstein's reputation as a sharp, sometimes combative investor precedes him, yet his campaigns have consistently highlighted a simple principle: shareholders deserve to see the value of their investments reflected fairly in the market. It is a philosophy born of both chess and trading—a belief that every inefficiency, every mispricing, every stubborn discount can be turned into opportunity with the right blend of strategy, patience, and pressure.
