RiverNorth Core Opportunity Fund to be reorganized into an ETF

Comments

• TheShadow

  April 29

  Here is the related filing:
  
  https://www.sec.gov/Archives/edgar/data/1936157/000199937125004898/cefz-485apos_042825.htm
• Charles

  April 30

  Wow. That's a big deal. I believe David championed this fund when it launched more than 10 years ago.
• Shostakovich

  April 30

  These ETF conversions don't make sense to me. Are these (low volume) products supposed to be something asset management firms double-dip on? You pay for the trade, as well as the management fee, or etc? Are they cheaper to manage / service than an open-end fund?
  
  I don't see many of these ETFs really garnering much of a market.
• hank

  April 30 edited April 30

  I uncovered RiverNorth about a week ago after searching several weeks for a CEF under the “market neutral” and “long-short” categories with no success. (Already owned Calamos’ CPZ). When I searched “tactical allocation” up popped RiverNorth’s closed-end RIV. After due diligence I made a small investment. (RiverNorth Headquarters: West Palm Beach, Fla.)
  
  The following disclaimer on their website has me puzzled:
  
  “RiverNorth’s mutual funds are distributed by ALPS Distributors, Inc. Member FINRA. ALPS Distributors, Inc. is unaffiliated with RiverNorth Capital Management, LLC, DoubleLine Capital LP or Oaktree Capital Management, L.P.”
  
  If “unaffiliated with” … then why mention those other firms? unless perhaps the RiverNorth I invested with is different from the one David highlighted? Website
  
  @Shostakovich asks a good question. Darned if I fully understand the eagerness of OEFs to convert to ETFs. But as others have said, ETFs are the popular trend - vastly outdrawing money over OEFs. I have an additional thought - Is it possible the ETF structure may reduce the chances of lawsuits by unhappy investors following a steep market slide? Oppenheimer in particular took a beating being sued after the ‘07-‘09 mess (re their their OEFs’ unanticipated steep losses) and eventually was acquired by Invesco. With an ETF you’re essentially buying directly into the market, whereas there seems to be more of an intermediary role for the sponsor under the OEF structure.
• Charles

  April 30 edited April 30

  @hank. No, I believe the note is trying to say the distributor is independent of the issuer.
  
  Here is link to David's profile from 2015, looks like:
  
  https://www.mutualfundobserver.com/2015/11/rivernorth-core-opportunity-rncoxrncix-november-2015/
  
  And here is link to Dashboard of Profiled Funds.
• hank

  April 30 edited April 30

  Thanks @Charles. Yes. Same company. Very much look forward to fully digesting the write-up by David you linked.
  
  And thank you for the linked profile page. Very impressive.
• yogibearbull

  April 30 edited April 30

  Mutual funds/OEFs are losing AUM in 2 ways.
  
  There are CIT cousins with lower ERs within 401k/403b.
  
  There are etf conversions. ETFs have much better accessibility. Fido and Schwab have good NTF platforms for OEFs, but many others stink.
  
  Also, after Vanguard's patent of the etf class expired, many others are offering etf classes.
  
  At most brokerages, ETFs trade commission-fee, but watch bid-ask - use limit-orders if wide bid-ask. Also avoid trading ETFs in the first or last 30 minutes of the trading session.
• Shostakovich

  April 30

  Hey, @all -- I confused RiverNorth with RiverPark (I thought it was RiverPark that was moving an OEF to an ETF; the bloom seems to be off R/N and much of R/P for some time now after "Mitch" blew up the R/P Long/Short Opportunity Fund);
  
  Editoring comments aside -- despite my errors, the question I posed above moving OEFs to ETFs remains. Note Tweedy, First Eagle, Oakmark (others) doing the same.
• Mitchelg

  April 30

  They would need to reduce the expense ratio to be of interest. FOF which is similar has a base expense ratio of .95 plus expenses of the underlying funds. RNCIX is 1.58% base expense ratio. Common folks and be competitive.
• hank

  April 30 edited April 30

  Shostakovich said:

  ”comments aside -- despite my errors, the question I posed above moving OEFs to ETFs remains. Note Tweedy, First Eagle, Oakmark (others) doing the same .”

  I’d enjoy a good thread / discussion comparing the benefits of OEFs / CEFs. I think it’s a lot more complicated than just the low fee & ease of trading paradigm usually cited by proponents of etfs.
  
  I found Jared Dillian’s “No Worries - How to Lead a Stress Free Financial Life” to be an interesting read. The author strongly recommends OEFs over etfs. The main reason seems to be the “detachment” they offer from minute by minute changes in value which may induce knee-jerk and unprofitable trading.
  
  I somewhat agree. I’ve gone with OEFs for my 4 core holdings (65-70% of portfolio) but also own one sleeve of CEFs / ETFs for the (opportunistic) trading they allow. My suspicion is that OEF investor bases will prove a bit more stable in any big prolonged sell-offs. All speculation of course … .
  
  
• yogibearbull

  April 30

  In another venue, I discussed mutual funds/OEFs vs ETFs.
  https://indoustribune.com/business/mutual-funds-or-etfs/
• Shostakovich

  May 1

  I like OEFs because it's easier to reinvest fractional shares. I also like the point @hank made about not being tempted to jump in and out of a position when the market does what it does.
• msf

  May 1

  These days, many if not most brokerages automatically reinvest ETF divs to the penny, so I don't find that to be a problem. Purchasing is another matter. It's hard to find a brokerage that will sell you fractional shares of ETFs (e.g. Schwab doesn't). OTOH, at Merrill, you can only reinvest whole shares in several of the MMFs it sells. The remainders are dumped into your core account!
  
  Temptation? That's your problem, not mine
  
  I prefer OEFs because there are no hidden costs (spreads, SEC fees), and because at the end of the day (literally) if you've invested $100 then your new shares are worth $100, no more, no less. And when you buy an ETF, there's always the question of whether you should buy it now, no wait, now, no, NOW. Limit orders can help with that but then what's the "correct" price to choose?
  
  Admittedly there's a similar question with an OEF - which day should you buy it? Somehow that seems more manageable because its more coarse and not instantaneous.
• fundly

  May 1

  I prefer ETF's in most cases because of the tax implications. When equitys are sold off in a downturn you face paying capital gain taxes on the OEF if you keep it in your portfolio where this is very rare in an ETF. The taxes can be substantial! Fidelity allows buys and sells of fractional ETF shares.
• Observant1

  May 1 edited May 1

  "And when you buy an ETF, there's always the question of whether you should buy it now, no wait, now, no, NOW. Limit orders can help with that but then what's the 'correct' price to choose?"
  
  I never place ETf buy orders during the first or last 30 minutes markets are open and always use limit orders.
  Prior to purchasing ETf shares, I'll check day range history and indicative intraday value (if available).
  After all that, it's often more of an art than a science to choose the "correct" price.
  My pricing choices are sometimes "correct" but other times they are not.
• Mona

  May 1

  @Observant1, why do you not purchase an ETF during the first or last 30 minutes that markets are open?
• hank

  May 1

  Mona said:

  @Observant1, why do you not purchase an ETF during the first or last 30 minutes that markets are open?

  See
  
  
• Mona

  May 1

  Thanks hank.
• msf

  May 1

  During the first and last 30 minutes of trading, spreads are typically at their widest, and prices can be volatile because professional traders dominate the buying and selling of shares as they look for ways to make a buck.

  (From @hank 's link)
  
  I too avoid trading near (either) end of day. And I also look at trading ranges, current pricing, etc. Though it often seems like more hassle than it's worth. Especially compared to buying OEFs.
  
  Tax considerations are moot in tax-sheltered accounts (and I'm gradually sheltering more assets via Roth conversions). They are something to keep in mind in taxable accounts. Echoing @fundly 's concerns is this M* piece.
  https://www.morningstar.com/sustainable-investing/when-bad-taxes-happen-good-funds