- NYLI CBRE Global Infrastructure Megatrends Term Fund (MEGI, Financial) announces a significant reliance on return of capital in its latest distribution.
- The fund shows a negative average annual total return of -0.70% since inception, despite a high distribution rate of 12.59% based on market price.
- Fiscal YTD distributions reveal a mixed composition, with only 64% derived from actual earnings.
NYLI CBRE Global Infrastructure Megatrends Term Fund (MEGI) has issued its Section 19(a) notice for April 2025, revealing key distribution and performance metrics. The fund is offering an annualized distribution rate of 12.59% based on a closing market price of $11.91 as of April 7, 2025. This rate decreases to 11.23% when calculated on the NAV of $13.36.
Performance data as of March 31, 2025, indicates a concerning average annual total return of -0.70% since the fund's inception on October 27, 2021. Meanwhile, the cumulative total return for the current fiscal period stands at 6.54%, reflecting some gains despite overall negative performance metrics since the fund's launch.
The current monthly distribution prominently features a 100% return of capital, amounting to $0.1250 per share. Fiscal year-to-date (YTD) distributions reveal that the fund has relied on 44% net investment income, 14% short-term capital gains, 6% long-term capital gains, and notably, 36% return of capital. Such a heavy reliance on return of capital signals potential sustainability concerns regarding the fund's distribution policy.
The fund's market price is trading at 11% below its NAV, suggesting investor skepticism about the long-term viability of its high distribution rates. This discount highlights worries that the fund might be a yield trap, offering high distributions while potentially depleting investor capital over time.
Investors are advised to consider these fundamentals when evaluating their positions in MEGI, as current distribution practices may have tax implications and impact the long-term value of investments. For further details on MEGI’s performance and distribution policy, stakeholders are recommended to review the fund's official communications.
