Why does the Fund trade at premiums or discounts to NAV?
FLC is a closed-end investment company. Closed-end funds have inherent advantages over traditional mutual funds (or “open-end funds”). For example, a closed-end fund like FLC can use preferred stock leverage and as a fixed pool, it can fully allocate its assets to higher yielding securities without regard to the volatile inflows and outflows associated with the shareholder purchases and redemptions that occur in open-end funds. Both these advantages can work to increase the distributions paid to FLC’s shareholders. These benefits are accompanied by investment risks that do not exist with open-end funds. Open-end funds issue and redeem shares directly with their shareholders at a price equal to the underlying value of all fund assets (Net Asset Value or NAV). Closed-end fund shareholders do not have the right to cause the redemption of their shares. Instead, closed-end fund shareholders buy and sell their shares on markets like the New York Stock Exchange. A closed-end fund’s shares sho
