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Calamos Investments Introduces Level Distribution Policy for Key Funds

Calamos Investments, a prominent name in the investment industry, has declared an important shift regarding the distribution strategy of its Closed-End Funds, specifically the Calamos Dynamic Convertible and Income Fund (NASDAQ: CCD), Calamos Convertible Opportunities and Income Fund (NASDAQ: CHI), and Calamos Convertible and High Income Fund (NASDAQ: CHY). Starting January 1, 2025, these funds will move from a managed distribution plan to a new level distribution framework.

The new structure aims to provide a consistent monthly distribution to shareholders. Specifically, CCD, CHI, and CHY have set their monthly distribution rates at fixed values of 19.5 cents, 9.5 cents, and 10 cents per share, respectively. This approach is expected to foster stability in distribution levels, making them more predictable and sustainable over the long term. However, the firm has cautioned that while this policy is designed to stabilize distributions, it does not guarantee ongoing success under fluctuating market conditions.

Calamos Investments asserts that the ability to maintain these distributions is contingent upon several external variables including market fluctuations, interest rate adjustments, and the overall performance of equity and fixed-income markets. Consequently, as conditions evolve, adjustments to the distribution strategy may be necessary. Shareholders are reminded that distributions may cease entirely without advance notice, a potential outcome that could affect the market prices of the funds' shares.

Implications for Shareholders

Investors should note that the funds might not consistently distribute the entirety of their net investment income in every period. In some instances, accumulated undistributed income could be paid out in conjunction with net investment income from other periods to maintain distribution levels. This could result in distributions that do not align with the total net investment income accrued within specific timeframes.

Moreover, if monthly investment income is insufficient, the funds could resort to returning capital to sustain the distribution amount. It is crucial to understand that a return of capital entails repaying shareholders their initial investments, which does not reflect the fund's performance and could potentially inflate the expense ratios as total assets decrease.

The transition to a level distribution policy reflects Calamos Investments' dedication to providing reliable returns to investors, yet it swiftly invites scrutiny regarding the performance levels these funds can realistically achieve amidst unstable market dynamics. Shareholders should not derive conclusions about fund performance purely from distribution amounts or the adopted policies.

The firm emphasizes regular communication with shareholders, ensuring transparency with detailed press releases whenever distributions diverge from net income earned. This move is critical since the actual amounts for tax purposes will vary based on the fund's yearly performance and tax regulations.

About Calamos Investments

Calamos Investments stands as a multifaceted global investment firm, proudly managing over $40 billion in assets, inclusive of more than $17 billion in liquid alternatives. The firm's extensive offerings range across various investment vehicles including ETFs, mutual funds, closed-end funds, interval funds, and separately managed portfolios. Headquartered in Chicago, the firm extends its presence through additional offices located in New York, San Francisco, and Miami.

For investors seeking to navigate the evolving landscape of investments, the transition to a level distribution policy signals Calamos' commitment to sustainability and long-term growth, though challenges remain as market conditions continue to fluctuate. For more information about Calamos Funds and their strategies, please visit Calamos Investments' official website.