XAI Octagon Floating Rate & Alternative Income Term Trust (XFLT)

As of 12/11/2017

Closing price

$9.94

 

Closing NAV

$9.76

 

Premium/discount

1.84%

 

Current distribution rate

8.33%

On December 1, XAI Octagon Floating Rate & Alternative Income Term Trust has declared its regular monthly distribution of $0.0690 per share on the Trust’s common shares, payable on December 29, 2017 to common shareholders of record as of December 15, 2017. For more details, see the press release.

Fund overview

The Trust seeks to achieve its investment objective by investing in a dynamically managed portfolio of opportunities primarily within the private credit markets. Under normal market conditions, the Trust will invest at least 80% of its Managed Assets (as defined in the Prospectus) in floating rate credit instruments and other structured credit investments.

Adviser

XA Investments LLC

Sub-Adviser

Octagon Credit Investors, LLC

Objective

Seeks attractive total return with an emphasis on income generation across multiple stages of the credit cycle. There can be no assurance that the Trust will achieve its investment objective, and you could lose some or all of your investment.

Snapshot (as of 12/11/2017)

Closing price $9.94
Closing NAV $9.76
Premium/discount 1.84%
Current distribution rate 8.33%
Tax reporting 1099 tax form
CUSIP 98400T106
Ticker XFLT
NAV ticker XFLTX
Shares outstanding 8,347,991
Total common assets $81,494,496
Total managed assets $120,359,496
Leverage Ratio 32.3%

Inception Date

9/27/2017

Inception Price

$10.00

Inception NAV

$9.78

Distribution Frequency

Monthly

Term

2029*

Portfolio management

The Trust’s investment portfolio will be comprised largely of floating-rate credit instruments and other structured credit investments, which XAI and Octagon expect to perform well in a rising interest rate environment. The Trust’s assets will be managed opportunistically primarily within private below investment grade credit markets1 including:

  • Senior secured floating-rate loans;
  • Structured credit (CLO debt and CLO equity);
  • Opportunistic credit (long/short Credit investments and stressed credits).

The Trust expects to be able to invest the net proceeds from the initial offering of common shares within three months.

1The Trust currently intends to invest primarily in below investment grade credit instruments, but may invest without limitation in investment grade credit instruments. Credit instruments are considered below investment grade quality if rated below Baa3- by Moody’s or below BBB- by S&P or Fitch or, if unrated, judged to be below investment grade quality by Octagon.

At the heart of Octagon’s disciplined investment philosophy is a deep understanding of fundamental credit analysis, enhanced by a process focused on optimizing returns against target risk profiles. Octagon’s investment philosophy combines relative value focus and active portfolio management. Over Octagon’s 23-year history, it has developed a repeatable and scalable credit selection and investment process.

Octagon’s investment process involves four key steps:

  1. Ongoing assessment of investment opportunities;
  2. Research, analysis and written recommendations with defined investment theses;
  3. Investment committee approval before any credit is considered for investment;
  4. Continual, collaborative monitoring that enhances decision making and risk management.
Octagon Proprietary Evalutions

Octagon Proprietary Evaluations

Octagon’s proprietary evaluations of credit, liquidity and collateral quality are a determinant in position size and target weighting. Octagon’s risk management process includes formal portfolio reviews and real-time portfolio monitoring.

Andrew D. Gordon

Andrew D. Gordon

Chief Executive Officer, Co-Chief Investment Officer

Mr. Gordon co-founded Octagon in 1994 and subsequently managed numerous Octagon funds before assuming his current position. He has over 30 years of experience in the below-investment grade leveraged loan and high yield bond asset classes, in both sell-side and buy-side capacities.

Michael B. Nechamkin

Michael B. Nechamkin

Co-Chief Investment Officer, Portfolio Manager

Mr. Nechamkin joined Octagon in 1999. He has 26 years of industry experience, including 17 years at Octagon. Mr. Nechamkin is a member of Octagon’s Investment Committee and serves as the Senior Portfolio Manager of three CLOs, four Separately Managed Accounts, and three Private Commingled Funds.

Lauren M. Basmadjian

Lauren M. Basmadjian

Portfolio Manager

Ms. Basmadjian joined Octagon in 2001. She has 15 years of industry experience. She is a member of Octagon’s Investment Committee and serves as the Portfolio Manager of ten CLOs, two Separately Managed Accounts, and two Private Commingled Fund. Prior to becoming a Portfolio Manager, Ms. Basmadjian managed Octagon’s workout efforts and also oversaw Octagon’s investments in the leisure and entertainment, retail, consumer products, business services, food and beverage and technology industries.

Gretchen M. Lam, CFA

Gretchen M. Lam, CFA

Portfolio Manager

Ms. Lam joined Octagon in 1999. She has 17 years of industry experience. She is a member of Octagon’s Investment Committee and serves as the Portfolio Manager of six CLOs, two Separately Managed Accounts, and three Private Commingled Funds. Prior to becoming a Portfolio Manager, Ms. Lam oversaw Octagon’s investments in the software, business services, finance and insurance, paper and packaging, gaming and lodging, homebuilding and real estate industries.

Performance

Total returns (% as of 11/30/17)

  1M QTD YTD Since
Inception
Price 0.40 0.20 0.20 0.20
NAV -6.82 -0.28 0.91 0.91
Benchmark 0.07 0.70 0.70 0.70

Pricing & fees

Fees (% of net assets attributable to common shares)

Annual Expenses Common Shares Total Fund
Management fees 2.43% 1.70%
Interest on borrowed funds 1.09% None
Other expenses    
Investor support and secondary market support services fee 0.29% 0.20%
Other 1.28% 0.90%
Total annual expense 5.09% 2.80%
Fee waiver -0.85% -0.60%
Total annual expense after fee waiver 4.24% 2.20%

Share Price

  Date Closing
Price($)
High 10/3/17 11.50
Low 12/5/17 9.85

NAV

  Date Closing
NAV($)
High 11/7/17 9.80
Low 11/15/17 9.68

Premium/discount

  Date Premium/
Discount
High 10/3/17 17.95%
Low 12/5/17 1.13%

IPO information

Date 9/27/2017
Price $10.00
NAV $9.78
NAV ticker XFLTX
CUSIP 98400T106

Literature & news