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

As of

Closing price

Closing NAV

Premium/discount

Current distribution rate1

Fund overview

The Trust invests in a dynamically managed portfolio of floating-rate credit instruments and other structured credit investments within the private markets. Under normal market conditions, the Trust will invest at least 80% of managed assets in senior secured loans, CLO debt and CLO equity.

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.

Adviser

XA Investments LLC

Sub-Adviser

Octagon Credit Investors, LLC

Snapshot (as of )

Closing price
Closing NAV
Premium/discount
Current distribution rate1
Tax reporting 1099 tax form
CUSIP
Ticker XFLT
NAV ticker XFLTX
Shares outstanding
Total common assets
Total managed assets
Leverage Ratio

Inception Date

9/27/2017

Inception Price

$10.00

Inception NAV

$9.78

Distribution Frequency

Monthly

Term

20292

1The current distribution rate is calculated as the most recent distribution annualized and divided by the closing price on the date set forth above.

Portfolio management

Octagon

Octagon has a 25+ year track record managing institutional client credit portfolios. A leading institutional credit investor with of assets under management (as of ), Octagon serves as the investment sub-adviser for XFLT and is responsible for portfolio management.

About Octagon

As Collateralized Loan Obligation (CLO) investors, Octagon evaluates how a given CLO’s portfolio, structure and manager might affect the risk and value of a given CLO investment. Such judgments rely heavily on Octagon’s experience and skill in synthesizing information into an investment thesis that can withstand the scrutiny of its investment committee. Octagon’s dual role as both a manager and investor in CLOs adds depth of perspective that few firms can match.

Team

The Octagon team—a cohesive, experienced, team of 36 investment specialists—is led by the Octagon investment committee, whose members have worked together for 18 years (on average) across multiple credit cycles.

Portfolio Management

The Octagon portfolio management team dynamically manages the Trust’s portfolio based on its evolving credit market outlook, and continues to search for promising opportunities in the credit markets. The Octagon team meets regularly to monitor portfolios using its robust review process while striving to manage risk via its proprietary internal credit rating and portfolio weighting system.

  • Seeks to optimize relative value
  • Focuses on improving credits to enhance alpha generation
  • Seeks attractive risk-adjusted returns

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 markets* including:

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

*The 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 25+ 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 Evaluations 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.

Performance

Total returns (as of )

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“Price” is based on the closing prices of XFLT on the NYSE at the end of trading on the last trading day of each period. “Benchmark” is the S&P/LSTA U.S. Leveraged Loan 100 Index, which is a market value-weighted index designed to measure the performance of the U.S. leveraged loan market. Performance data quoted represents past performance. Past performance does not guarantee of future results. Current performance may be higher or lower than the data shown. Returns assume reinvestment of distributions, and NAV returns are net of fund expenses. See “Risks” at the bottom of this page.

Portfolio composition

Asset allocation (% as of )

Asset Allocations are measured as a percentage of the fund's total investments as of . Allocations are not GAAP adjusted and may vary and are subject to change without notice. The total may not equal 100% due to rounding.

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Performance data quoted represents past performance. Past performance does not guarantee of future results. Current performance may be higher or lower than the data shown.

An investment in this fund presents a number of risks and is not suitable for all investors. Investors should carefully review and consider potential risks before investing. For more detailed information on the specific risks associated with this fund, please view the XFLT Fund page.

Fund characteristics (% as of 08/31/2019)

Number of Holdings
Average bond price as a percentage of par %
Effective maturity years

Fund Characteristics are as of 8/31/19, may vary and are subject to change without notice.

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Performance data quoted represents past performance. Past performance does not guarantee of future results. Current performance may be higher or lower than the data shown.

An investment in this fund presents a number of risks and is not suitable for all investors. Investors should carefully review and consider potential risks before investing. For more detailed information on the specific risks associated with this fund, please view the XFLT Fund page.

Top Ten Portfolio Holdings (as of )

Holding% Portfolio
Holding% Portfolio

Holdings are measured as a percentage of the funds Total Investments as of . Holdings are not GAAP adjusted and may vary and are subject to change without notice.

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Performance data quoted represents past performance. Past performance does not guarantee of future results. Current performance may be higher or lower than the data shown.

An investment in this fund presents a number of risks and is not suitable for all investors. Investors should carefully review and consider potential risks before investing. For more detailed information on the specific risks associated with this fund, please view the XFLT Fund page.

Maturity breakdown (as of )

Maturities are as of , may vary and are subject to change without notice.

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Performance data quoted represents past performance. Past performance does not guarantee of future results. Current performance may be higher or lower than the data shown.

An investment in this fund presents a number of risks and is not suitable for all investors. Investors should carefully review and consider potential risks before investing. For more detailed information on the specific risks associated with this fund, please view the XFLT Fund page.

Pricing & fees

Share price and NAV history ()

Pricing history

Date
Share Price
NAV
Premium / Discount
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Premium / Discount Information ()

Share Price (as of )

DATE CLOSING PRICE($)
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NAV (as of )

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IPO information

Date 9/27/2017
Price $10.00
NAV $9.78
NAV ticker XFLTX
CUSIP 98400T106
ANNUAL EXPENSES (as of 3/31/2021) AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO COMMON SHARESb AS A PERCENTAGE OF MANAGED ASSETS
Management fees 2.36% 1.70%
Leverage expensea 0.56% 0.40%
Other expenses    
Investor support and secondary market support services fee 0.28% 0.20%
Other 1.42% 1.02%
Total annual expense 4.62% 3.32%
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Expenses shown in the table are based on actual expenses of the Trust for the six months ended 3/31/21, and the Trust’s average managed assets and average net assets for the six months ended 3/31/21. Common shareholders bear the expenses of the Trust, including the management fee, which is calculated on the basis of the Trust’s managed assets, including proceeds from leverage, and the cost of leverage, as shown in the column “As a Percentage of Net Assets Attributable to Common Shares” above. As of March 31, 2021, the Trust had outstanding leverage equal to 34.52% of the Trust’s managed assets. See the Trust’s Annual Report for full information on expenses.

aRepresents both interest expense on borrowed funds and preferred dividends.

bCommon shareholders will pay the expenses set forth in this column.

Common share distributions

Payable Date Record Date Ex-Date Declaration Date Amount Distribution Type
Income3
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Distributions data is unavailable at this time.

Preferred shares

6.50% Series 2026 Term Preferred Shares
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Shares of the Fund are available through certain brokerage accounts. Visit your brokerage today to see how you can get started.

Carefully consider the investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Fund’s prospectus and supplements thereto, which may be obtained by visiting the Fund’s Website or by calling 888-903-3358. Read the prospectus carefully before investing. Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Past performance is no guarantee of future results.

The information on this web site is intended for U.S. residents only. The information provided does not constitute a solicitation of an offer to buy, or an offer to sell securities in any jurisdiction to any person to whom it is not lawful to make such an offer. Consult with your financial advisor, accountant, or attorney prior to making any investment decision. No information in this website constitutes such advice. Securities offered through Foreside Fund Services, LLC.

Foreside Fund Services, LLC is not affiliated with XA Investments LLC.

Listing NYSE trading symbol "XFLTPRA"
Closing Price (as of )
Coupon 6.50% per annum
Number of Shares 1,040,000
Par Value $25.00 per share
Original Issue Date March 29, 2021
Maturity Date March 31, 2026
Original Redemption The Shares may be redeemed in whole or in part at any time or from time to time at Issuer’s option on or after March 31, 2023 upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the Liquidation Preference of the Shares to be redeemed plus accrued and unpaid dividend payments otherwise payable thereon for the then-current monthly dividend period accrued to the date fixed for redemption.
Dividend Payment Date The Series 2026 Term Preferred Shares pay dividends every January 31, April 30, July 31 and October 31, commencing on July 31, 2021. If a dividend payment date falls on a day that is not a business day, then the dividend payment will be made on the next succeeding business day.
XFLTPRA Prospectus

1The current distribution rate is calculated as the most recently distribution annualized and divided by the closing price on the date set forth above.

2The Trust will terminate on or before December 31, 2029 (the “Termination Date”). However, the Board of Trustees may cause the Trust to conduct a tender offer to purchase 100% of the then outstanding Common Shares of the Trust at a price equal to the net asset value per Common Share on the expiration date of the tender offer, as of a date within twelve months preceding the Termination Date (an “Eligible Tender Offer”). Following the completion of an Eligible Tender Offer, the Board of Trustees may eliminate the Termination Date upon the affirmative vote of a majority of the Board of Trustees and without a shareholder vote.

The Termination Date may be extended (i) once for up to one year (i.e., up to December 31, 2030), and (ii) once for up to an additional six months (i.e., up to June 30, 2031), in each case upon the affirmative vote of a majority of the Board of Trustees and without a shareholder vote. The Trust’s investment objective and policies are not designed to seek to return to investors that purchase Common Shares in this offering their initial investment of $10.00 per Common Share on the Termination Date or in an Eligible Tender Offer, and such investors and investors that purchase Common Shares after the completion of this offering may receive more or less than their original investment upon termination or in an Eligible Tender Offer. The Adviser will pay all costs and expenses associated with the making of an Eligible Tender Offer, other than brokerage and related transaction costs associated with disposition of portfolio investments in connection with the Eligible Tender Offer, which will be borne by the Trust, and indirectly by Common Shareholders. Because assets of the Trust will be liquidated in connection with a termination of the Trust or an Eligible Tender Offer, the Trust will incur transaction costs in connection with dispositions of portfolio securities. The Trust may receive proceeds from the disposition of portfolio investments that are less than the valuations of such investments by the Trust.

3To permit the Trust to maintain more stable monthly distributions, the Trust may distribute more or less than the amount of the net investment income earned in a particular period. There is no assurance the Trust will pay regular monthly distributions or that it will do so at a particular rate. Distributions may be paid by the Trust from any permitted source and, from time to time, all or a portion of a distribution may be a return of capital.

Risks

The Trust uses leverage to seek to enhance total return and income. The Trust may use leverage through (i) the issuance of senior securities representing indebtedness, including through borrowing from financial institutions or issuance of debt securities, including notes or commercial paper (collectively, “Indebtedness”), (ii) the issuance of preferred shares (“Preferred Shares”) and/or (iii) reverse repurchase agreements, securities lending, short sales or derivatives, such as swaps, futures or forward contracts, that have the effect of leverage (“portfolio leverage”). The Trust will not utilize leverage, either through Indebtedness, Preferred Shares or portfolio leverage, in an aggregate amount in excess of 40% of the Trust’s Managed Assets (including the proceeds of leverage).

The Trust has entered into a revolving credit facility and any borrowings through the credit facility are secured by eligible securities held in the Trust’s portfolio of investments. The Trust has also issued Series 2026 Term Preferred Shares, which are senior securities that constitute shares of beneficial interest of the Trust. The 2026 Preferred Shares rank senior to the Trust’s Common Shares in priority of payment of dividends and as to the distribution of assets upon dissolution, liquidation or winding up of the Trust’s affairs; equal in priority with all other future series of Preferred Shares the Trust may issue as to priority of payment of dividends and as to distributions of assets upon dissolution, liquidation or the winding-up of the Trust’s affairs; and subordinate in right of payment to amounts owed under the Trust’s existing credit facility, and to the holder of any future senior indebtedness, which may be issued without the vote or consent of Preferred Shareholders. The use of leverage is a speculative technique that involves special risks. The Trust currently anticipates utilizing leverage to seek to enhance total return and income. There can be no assurance that the Advisor’s and the Sub-Adviser’s expectations will be realized or that a leveraging strategy will be successful in any particular time period. Use of leverage creates an opportunity for increased income and capital appreciation but, at the same time, creates special risks. Leverage is a speculative technique that exposes the Trust to greater risk and increased costs than if it were not implemented. The more leverage that is utilized by the Trust, the more exposed the Trust will be to the risks of leverage. The use of leverage by the Trust causes the net asset value of the common shares to fluctuate significantly in response to changes in interest rates and other economic indicators. As a result, the net asset value, market price and dividend rate of the common shares is likely to be more volatile than those of a fund that is not exposed to leverage. Leverage increases operating costs, which may reduce total return. The Trust pays interest on its borrowings, which may reduce the Trust’s return. Increases in interest rates that the Trust must pay on its borrowings will increase the cost of leverage and may reduce the return to common shareholders. The risk of increases in interest rates may be greater in the current market environment because interest rates are near historically low levels. During the time in which the Trust is utilizing leverage, the amount of the investment advisory fee paid by the Trust will be higher than if the Trust did not utilize leverage because the fees paid will be calculated based on the Trust’s Managed Assets, including proceeds of leverage. Common shareholders bear the portion of the management fee attributable to assets purchased with the proceeds of leverage, which means that common shareholders effectively bear the entire management fee.

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Past performance is no guarantee of future results.

An investment in the Trust is subject to investment risk, including the possible loss of your entire investment. There can be no assurance that the Trust’s objectives will be achieved. The Trust is a diversified, closed-end management investment company. Shares of closed-end management investment companies frequently trade at a discount from their net asset value, which is a risk separate and distinct from the risk that the fund's net asset value could decrease as a result of its investment activities. The Trust intends to invest primarily in below investment grade instruments, which are commonly referred to as “high yield” securities or “junk” bonds. Investments in below investment grade securities are considered predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal when due and such issuers are not perceived as strong financially as those with higher credit ratings. The Trust intends to invest a significant portion of its assets in CLO debt and subordinated notes, which often involve risks that are different from or more acute than risks associated with other types of credit instruments. Investors should see the "Risks" section in the Trust’s most recent Annual Report on Form N-CSR for a detailed discussion of factors investors should consider carefully before deciding to invest in the Trust’s Shares.

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