The Calamos Convertible Opportunities and Income Fund (CHI) is a closed-end fund that offers a high yield of 10.44%. It invests primarily in convertible securities and high-yield bonds, which provide potential capital gains through conversion to common stock and coupon payments, respectively.
The fund has outperformed the convertible bond index over the past six months but underperformed the S&P 500. Its largest holdings include companies such as Uber, Ford, and Wayfair, which are typically revenue or cash-flow constrained and issue convertible securities as an alternative to traditional debt.
While the fund has a relatively low annual turnover of 39.00% and a moderate expense ratio of 1.39%, it employs leverage, which can amplify both gains and losses. Currently, its leverage ratio is 36.85%, which is within the acceptable range for closed-end funds.
The fund’s distribution coverage has been a concern in the past, but it appears to have improved recently. Its net asset value has increased over the past year, indicating that it has earned sufficient investment profits to cover its distributions.
Overall, the Calamos Convertible Opportunities and Income Fund offers a compelling combination of high yield, moderate risk, and potential for capital gains. However, its premium to net asset value is currently quite high, which may warrant caution before investing.