If You Invested in Guggenheim Active Allocation Fund (GUG)

Guggenheim Active Allocation Fund (ticker symbol GUG) is described as a diversified closed-end management investment company. According to available information, the fund’s stated investment objective is to maximize total return through a combination of current income and capital appreciation. It pursues this objective by investing in fixed-income and other debt instruments drawn from different sectors and credit qualities, and it may also invest in equities.

The fund applies tactical asset allocation models to determine how it allocates assets between fixed-income and equity securities. This approach allows the portfolio to shift its emphasis among various types of securities based on the fund’s allocation models and guidelines. A majority of its investments are made in corporate bonds, with the remainder allocated among senior floating rate interests, asset-backed securities, preferred stocks, and other securities as described in the available profile.

Investment focus and portfolio composition

Based on the description, Guggenheim Active Allocation Fund invests in a mix of fixed-income and equity securities. The fixed-income portion includes corporate bonds and other debt instruments with varying credit qualities. The fund may also hold senior floating rate interests, asset-backed securities, preferred stocks, and other securities. The equity portion reflects the fund’s ability to invest beyond debt instruments when its allocation models support that positioning.

The emphasis on corporate bonds as a majority of investments indicates a significant allocation to corporate credit, while the presence of senior floating rate interests and asset-backed securities adds exposure to other segments of the debt markets. Preferred stocks and other securities provide additional tools for the fund to pursue its objective of total return through income and capital appreciation.

Closed-end fund structure

Guggenheim Active Allocation Fund is identified as a closed-end management investment company. In this structure, the fund is managed with a defined pool of capital and invests according to its stated objective and policies. The description notes that the fund uses tactical asset allocation models to guide decisions about how much to allocate to fixed-income versus equity securities, and how to position within the various types of instruments it is permitted to hold.

Service providers and key agreements

According to a Form 8-K filing, Guggenheim Active Allocation Fund is associated with the New York Stock Exchange under the symbol GOF in that filing, and it entered into several material agreements related to fund administration, accounting, and custody services. The filing describes the fund’s entry into a Fund Administration and Accounting Agreement with The Bank of New York Mellon (BNY). Under this agreement, BNY performs administrative functions and bookkeeping, accounting, and pricing functions for the fund. For these services, BNY receives a fee that is accrued daily and paid monthly, based on the fund’s average daily net assets, subject to a minimum annual fee, and the fund reimburses BNY for certain out-of-pocket expenses.

The same filing explains that the fund entered into a Custody Agreement and a Foreign Custody Manager Agreement with BNY, amending and replacing prior agreements. Under the Custody Agreement, BNY serves as the fund’s custodian and holds securities and cash on behalf of the fund in accordance with the Investment Company Act of 1940, as amended. Under the Foreign Custody Manager Agreement, BNY provides services as foreign custody manager for the fund in connection with its role as custodian. BNY receives a monthly fee based on, among other factors, the average daily net assets of the fund, plus certain charges for securities transactions.

The Form 8-K also notes that, in conjunction with entering into the new Fund Administration and Accounting Agreement, Guggenheim Active Allocation Fund terminated its existing administration and accounting agreement with MUFG Investor Services (US) LLC, subject to certain ongoing transition services. The filing states that, other than ordinary course payments under the prior agreement through the effective date of termination, no termination or other fees are payable by the fund in connection with that termination.

In addition, the filing describes the termination of prior custody and foreign custody manager agreements with BNY, in conjunction with entering into the new Custody Agreement and Foreign Custody Manager Agreement. As with the administration agreement, the filing states that, other than ordinary course payments under the prior custody agreements through the effective date of termination, no termination or other fees are payable by the fund in connection with the termination of those prior agreements.

Regulatory framework

The fund’s custodial arrangements, as described in the Form 8-K, are structured to comply with the Investment Company Act of 1940, as amended. The role of BNY as custodian and foreign custody manager is framed in the filing in terms of holding securities and cash on behalf of the fund and providing foreign custody services in connection with its custodial role.

Summary

In summary, Guggenheim Active Allocation Fund is described as a diversified closed-end management investment company with an objective of maximizing total return through income and capital appreciation. It invests primarily in corporate bonds, along with senior floating rate interests, asset-backed securities, preferred stocks, other securities, and may also invest in equities. The fund uses tactical asset allocation models to determine how it allocates assets between fixed-income and equity securities. Its operations involve formal agreements for administration, accounting, custody, and foreign custody management, as outlined in its Form 8-K filing.