Why my fund's price moves more than its holdings - borrowing
Most closed-end funds borrow to buy more holdings. That lifts the income and the risk together. Here is how much, and what it costs.
The papers call it "leverage"; money borrowed by selling a special class of shares is "preferred shares", and repaying it a "redemption".
What the fund does
A fund with $100 of holders' money may borrow $40 more and hold $140 of bonds or shares. The income on $140 is paid to the holders of $100 - after the interest on the $40. When the holdings rise 10%, the holders gain 14%; when they fall 10%, the holders lose 14%. That is the whole idea, in both directions.
Two ways to borrow
A bank loan, whose interest changes with rates; or a special class of the fund's own shares that gets paid first and can be repaid at the fund's choice. Repaying that class is a routine notice we file under the fund's timeline; it asks nothing of the holders of the ordinary shares.
What to look at
Two numbers on the fund's page: how much of what the fund holds is borrowed money, and the total yearly cost including the interest. A fund that borrows a lot in a year when rates rise sees its income squeezed from both sides. The funds below borrow the most among the ones we cover, at their latest quarterly report.
The funds that borrow the most, at their latest quarterly report
- EARN - Ellington Credit Co
borrowed money made up 58.3% of what it held on June 30, 2026 - so a 10% move in its holdings is roughly a 24% move for the holder. - CPZ - Calamos Long/Short Equity & Dynamic Income Trust
borrowed money made up 49.7% of what it held on April 30, 2026 - so a 10% move in its holdings is roughly a 20% move for the holder. - BRW - Saba Capital Income & Opportunities Fund
borrowed money made up 49% of what it held on April 30, 2026 - so a 10% move in its holdings is roughly a 20% move for the holder. - OCCI - OFS Credit Company
borrowed money made up 48.3% of what it held on July 31, 2026 - so a 10% move in its holdings is roughly a 19% move for the holder. - DMO - Western Asset Mortgage Opportunity Fund
borrowed money made up 47.1% of what it held on June 30, 2026 - so a 10% move in its holdings is roughly a 19% move for the holder.
Borrowed money as a share of everything the fund holds, from each fund's latest quarterly holdings report to the U.S. Securities and Exchange Commission; each line links to the fund's page. Checked Sept 18, 2026.