Calamos Funds to Implement Stable Monthly Distribution Policy

Calamos Funds Unveil Level Distribution Policy

Calamos Investments has made a significant announcement regarding its 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). The transition from a managed distribution plan to a level distribution plan is set to enhance the experience for shareholders of these funds.

Understanding the Level Distribution Plan

The newly adopted level distribution policy aims for a more predictable financial landscape for investors. Each fund will provide monthly distributions at a consistent rate, which is currently defined as 19.5 cents per share for CCD, 9.5 cents per share for CHI, and 10 cents per share for CHY. This model intends to provide stability amidst the fluctuations often experienced in financial markets.

The Importance of Stability in Distributions

This policy is designed to help maintain consistent and reliable payouts to shareholders over time. Calamos Investments believes that by adhering to this level distribution plan, it can offer more reliable investment returns, though it emphasizes that such rates are not guaranteed. Investors should remain aware that the effectiveness of this policy will be influenced by various market factors.

Possible Challenges and Considerations

While Calamos Investments is optimistic about the new policy, shareholders should be cognizant of potential challenges. The ability to maintain stable distributions can be affected by market conditions, interest rate fluctuations, and overall performance in equity, convertible, and fixed-income markets. Changes in portfolio conditions may impact the funds' capacity to uphold their distribution commitments.

Communication and Transparency with Shareholders

Investors can expect monthly updates regarding distribution declarations from the funds. However, the funds hold the discretion to adjust or even cease distributions without notice. This can understandably raise concerns among shareholders, as such changes could potentially affect the market value of their shares.

Tax Implications and Capital Returns

From a tax perspective, each fund is obligated to distribute the majority of its net investment income annually to minimize federal tax liabilities. This means that investors may not always receive dividends equivalent to the net income earned during that period. Additionally, should there be a shortfall in investment income, distributions may be structured as returns of capital, which is crucial for investors to understand.

Evaluating Distribution Amounts

It is essential for investors not to equate distribution amounts with the funds' overall performance. A return of capital signifies that part of the investors' initial investment is being returned, rather than being generated from investment performance. As these distributions occur, the expenses associated with the funds would likely rise, thus impacting overall returns.

About Calamos Investments

Calamos Investments stands as a diversified global investment entity, offering a wide array of investment strategies, including traditional and alternative investments. Boasting over $40 billion in assets under management and a focus on providing innovative solutions, Calamos caters to various clients ranging from individual investors to large institutions.

With multiple offices across major U.S. cities, including New York and San Francisco, Calamos Investments serves a diverse clientele. The company remains committed to improving investment experiences through strategic growth and careful management of its funds.

Frequently Asked Questions

What is the new distribution policy for Calamos funds?

The new policy shifts from a managed to a level distribution approach, aiming to provide consistent monthly payouts to investors.

What amounts are being distributed monthly per share?

CCD will distribute 19.5 cents, CHI will distribute 9.5 cents, and CHY will distribute 10 cents per share monthly.

How does the level distribution plan affect investment returns?

This plan aims to stabilize returns but does not guarantee specific distribution amounts, as market factors may influence payouts.

Can the funds change or cease distributions without notice?

Yes, the funds have the discretion to adjust or stop distributions without prior notification to shareholders.

What is a return of capital in relation to distributions?

A return of capital occurs when part of the investor's original investment is returned rather than a yield, which may affect the overall value of the fund.

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