Highland Global Allocation Fund Stock Price, News & Analysis
Company Description
Highland Global Allocation Fund (NYSE: HGLB) is a diversified, closed-end management investment company in the asset management industry. The fund’s stated investment objective is to seek long-term growth of capital and future income. According to its description, Highland Global Allocation Fund pursues this objective by investing in a portfolio of U.S. and foreign equity, debt, and money market securities, and it may also invest in senior loans to domestic or foreign corporations, partnerships, and other entities that operate in a variety of industries and geographic regions.
The fund trades on the New York Stock Exchange under the ticker symbol HGLB and is managed by NexPoint Asset Management, L.P., an SEC-registered investment adviser. NexPoint Asset Management, L.P. serves as adviser to a suite of registered funds, including open-end mutual funds, closed-end funds, and, as disclosed in certain releases, an exchange-traded fund. Within this platform, Highland Global Allocation Fund functions as a closed-end fund that provides investors access to a professionally managed, globally oriented allocation strategy across multiple asset classes.
Investment objective and strategy
The stated investment objective of Highland Global Allocation Fund is to seek long-term growth of capital and future income. To pursue this objective, the fund invests in a mix of U.S. and foreign equity securities, debt instruments, and money market securities. It may also invest in senior loans to domestic or foreign corporations, partnerships, and other entities in various industries and geographic regions. This multi-asset, globally focused approach is intended to give the portfolio exposure to different types of securities and issuers, as described in the fund’s profile.
Highland Global Allocation Fund is described in multiple public communications as a closed-end fund managed by NexPoint Asset Management, L.P. As a closed-end investment company, its shares trade on an exchange and the market price of the fund’s shares can differ from its net asset value (NAV). The fund’s disclosures emphasize that shares of closed-end investment companies frequently trade at a discount to NAV and that the price of the fund’s shares is determined by factors, several of which are beyond the control of the fund.
Management and advisory platform
The fund is managed by NexPoint Asset Management, L.P., which is identified in the fund’s public announcements as an SEC-registered investment adviser. NexPoint Asset Management, L.P. is described as the adviser to a suite of registered funds, including open-end mutual funds and closed-end funds, and in some disclosures also an exchange-traded fund. Within this advisory framework, Highland Global Allocation Fund is one of the closed-end funds for which NexPoint provides portfolio management and advisory services.
Certain communications also note that the fund’s investment activities have included positions facilitated by NexPoint’s corporate credit and equities team. For example, one release attributes a change in the fund’s NAV to an investment in a data center real estate investment trust that converted from a convertible preferred equity position to common stock following a public listing. This illustrates that the fund’s portfolio can include securities across the capital structure, consistent with its ability to invest in equity, debt, and senior loans.
Distribution approach and level distribution policy
Highland Global Allocation Fund has publicly described a level distribution policy approved by its Board of Trustees in March 2019. Under this level distribution policy, the fund makes monthly distributions to stockholders at a constant and fixed (but not guaranteed) rate. The rate is reset periodically based on a calculation that uses the average of the fund’s NAV per share as reported for the final five trading days of a specified period preceding the announcement of distributions.
The fund’s announcements explain that the Board may amend the level distribution policy, the distribution amount, or distribution intervals, or the fund may cease distributions entirely, at any time without prior notice to shareholders. The fund also discloses that there can be no guarantee that the level distribution policy will be successful in its goals and that the fund’s ability to maintain a stable level of distributions depends on factors such as changes in financial markets, market interest rates, and the performance of overall equity and fixed-income markets.
Public disclosures further state that the fund may, at times and in its discretion, pay out less than the entire amount of net investment income earned in a particular period and may at times pay out accumulated undistributed income in addition to net investment income earned in other periods to help maintain a stable level of distributions. The fund also notes that, to the extent sufficient investment income is not available on a monthly basis, distributions may consist of return of capital in order to maintain the distribution amount. The fund explains that a return of capital occurs when some or all of the money that shareholders invested in the fund is paid back to them and that such a return does not necessarily reflect investment performance and should not be confused with yield or income.
Dividend reinvestment and tax reporting
Highland Global Allocation Fund offers shareholders the option of reinvesting distributions in additional common shares through the fund’s Dividend Reinvestment Plan or electing to receive cash. Shareholders who wish to receive their distribution in cash must opt out of the Dividend Reinvestment Plan, and the fund’s communications direct investors to the prospectus for a detailed description of the plan.
The fund states that, with each distribution that does not consist solely of net investment income, it will issue a notice to shareholders providing information regarding the amount and composition of the distribution and related information. These notices are described as estimates that are not provided for tax reporting purposes. The fund indicates that actual amounts and sources of distributions for tax reporting purposes depend on the fund’s investment experience during its full fiscal year and may be subject to changes based on tax regulations. The fund states that it will send individual shareholders a Form 1099-DIV for each calendar year that will explain how to report these distributions for federal income tax purposes and advises investors to consult their tax advisors regarding tax implications.
Risk considerations and trading characteristics
In its public statements, Highland Global Allocation Fund emphasizes that no assurance can be given that the fund will achieve its investment objectives. It also highlights that shares of closed-end investment companies frequently trade at a discount to NAV, and that the market price of the fund’s shares is influenced by multiple factors, many of which are beyond the fund’s control. As a result, the fund notes that it cannot predict whether its shares will trade at, below, or above NAV. The disclosures also reiterate that past performance does not guarantee future results.
Prospective investors are repeatedly encouraged in the fund’s communications to consider the fund’s investment objectives, risks, charges, and expenses carefully before investing and to review the fund’s prospectus for detailed information. These statements underscore that investment in the fund involves risk and that investors should rely on the prospectus and related materials for a full description of those risks.
Role within the financial services sector
Within the financial services sector, Highland Global Allocation Fund is categorized as an asset management vehicle structured as a closed-end fund. Its stated ability to invest across U.S. and foreign equity, debt, money market securities, and senior loans to various entities positions it as a global allocation fund with exposure to multiple asset classes and issuers. The fund’s association with NexPoint Asset Management, L.P. connects it to a broader platform of registered investment funds managed by an SEC-registered adviser.
According to the fund’s public disclosures, investors interested in Highland Global Allocation Fund are encouraged to review the prospectus for detailed information on investment strategies, risks, fees, and operational policies, including the level distribution policy, Dividend Reinvestment Plan, and tax reporting practices.