W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
Form N-CSR is to be used by management investment
companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required
to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use
the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information
specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection
of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”)
control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing
the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection
of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
First
Trust Specialty Finance and Financial Opportunities Fund (FGB)
Semi-Annual
Letter from the Chairman and CEO
May
31, 2023
Dear
Shareholders,
First
Trust is pleased to provide you with the semi-annual report for the First Trust Specialty Finance and Financial Opportunities Fund (the
“Fund), which contains detailed information about the Fund for the six months ended May 31, 2023.
Between
developments at the Federal Reserve (the “Fed”), stock market returns, and the myriad of economic data that we have processed
here at First Trust over the past six months, I have no shortage of developments to share with you. Let’s begin with the Fed. In
a widely expected move, the Fed voted to keep the Federal Funds target rate unchanged at their meeting on June 14, 2023, ending a streak
of ten straight interest rate increases over the past 15 months. That said, the Fed also hinted that at least two more interest rate hikes
are likely if they are going to bring inflation down to their desired level of 2.0%. Inflation, as measured by the 12-month rate of change
in the Consumer Price Index, stood at 4.0% as of June 20, 2023, well below its most recent high of 9.1% in June 2022. Despite tighter
monetary policy, the U.S. added 1.57 million jobs this year, a 2.5% annualized growth rate, and real gross domestic product rose at a
1.3% annualized rate in the first quarter of 2023, according to Brian Wesbury, Chief Economist at First Trust.
Driven
by developments in Artificial Intelligence, the S&P 500®
Index has had an exceptional start to the year, posting a total return of 15.8% for the year-to-date period ended June 16, 2023. The tech-centric
Nasdaq-100 Index® has seen a staggering 38.5% total return
over the same period. When the stock market increases by 20% or more from its most recent low, it is often referred to as a “bull
market.” On June 8, 2023, the S&P 500® Index closed
at 4,293.93, 20.04% above its most recent low of 3,577.03 (which occurred on October 12, 2022). We’ll leave it to the pundits to
debate how long this bull market will last, but history shows that bull markets typically fare better when there are longer pauses between
interest rate hikes, according to Bloomberg.
Meanwhile,
the effects of higher inflation and the Fed’s restrictive monetary policy appear to be taking a toll on the U.S. consumer. U.S.
household debt reached a record $17.05 trillion in the first quarter of 2023. Furthermore, total balances for U.S. credit card holders
did not decline in the first quarter of the year, marking the first time that has happened since 2001. ATTOM, a property data analytics
company, reported that U.S. foreclosure activity (including default notices) for the month of May 2023 increased by 14%, to 35,195 properties,
from the same period a year ago, according to its own release. That said, not all the news is negative. The Fed reported that the net
worth of U.S. households stood at $148.8 trillion at the end of the first quarter of 2023, up $3 trillion from when it stood at $145.8
trillion at the end of the fourth quarter of 2022, according to MarketWatch. Most of the increase in household net worth can be attributed
to the rebound in the stock market. The value of equities held by U.S. households jumped by $2.4 trillion in the first quarter of 2023.
As the great economist Milton Friedman famously said, the effects of monetary policy are long and variable. In my opinion, time will reveal
the full impact of the tighter economic policies of the past 15 months on the consumer and the U.S. economy.
Thank
you for giving First Trust the opportunity to play a role in your financial future. We value our relationship with you and will report
on the Fund again in six months.
Sincerely,
James
A. Bowen
Chairman
of the Board of Trustees
Chief
Executive Officer of First Trust Advisors L.P.
Portfolio
Commentary (Continued)
First
Trust Specialty Finance and Financial Opportunities Fund (FGB)
Semi-Annual
Report
May
31, 2023 (Unaudited)
The
Fund’s market value total return for the first six months of its fiscal year was below that of the Blended Benchmark, while the
net asset value (“NAV”) total return was higher. The difference between the Fund’s market value total return and the
NAV total return was a function of the widening of the Fund’s discount to NAV. A good portion of the wider discount formed
during and after the failure of Silicon Valley Bank in the first quarter of 2023. Investors developed a high level of concern with regard
to small and mid-sized lenders, given that many of the issues contributing to the failure existed in other financial institutions. In
response, many regional and smaller bank stocks declined substantially in valuation.
Although
BDCs are small and mid-sized lenders, they are substantially different than banks. Their capital is formed with investor equity and various
forms of debt, while not utilizing deposits. BDCs also utilize a much lower proportion of debt on their balance sheets and are required
to mark their assets to market each quarter. These distinctions reflect a very different business model relative to banks and, accordingly,
the banking challenges from the first quarter of 2023 had little direct impact on BDCs. In fact, earnings reports from the BDC industry
revealed few, if any, disruptions among BDCs that resulted from the banking crisis. Instead, many management teams conveyed stability,
high liquidity, and an expectation that their lending opportunities were likely to improve as the banking industry recovers. Of course,
this isn’t to say that BDCs are without risk; rather, we underscore that their risk is much different. During and after the first
quarter of the calendar year, the differences were often overlooked and BDC valuations declined, while the Fund’s discount to NAV
widened. With the dust settling, we believe the operational results of BDCs will reflect a very different path, one that may pave the
way to improving valuations.
The
Fund remained well below the Blended Benchmark’s allocation to MBS REITs, which continued to face multiple challenges and a
volatile environment. However, as we moved through the early part of 2023, a more constructive setting for the industry began to emerge,
fostered by wider MBS spreads and improving visibility with regard to the Federal Reserve’s (the “Fed”) policy. It was
particularly helpful for MBS REITs more heavily weighted toward Agency MBS, which is where the Fund was focused.
The
Fund’s allocation to large cap financials continued to provide diversification and liquidity in the first half of the Fund’s
fiscal year, while also delivering higher relative returns. These companies have lower volatility compared to BDCs or MBS REITs and have
contributed to the Fund’s NAV accretion over time.
The
Fund uses leverage because we believe that, over time, leverage provides opportunities for additional income and total return for common
shareholders. However, the use of leverage exposes common shareholders to additional volatility. For example, as the prices of securities
held by the Fund decline, the negative impact of valuation changes on Common Share NAV and common shareholder total return is magnified
by the use of leverage. Conversely, leverage may enhance Common Share returns during periods when the prices of securities held by the
Fund are generally rising. For the performance referenced above, the use of leverage had a negative impact on returns.
The
Fund has a practice of seeking to maintain a relatively stable quarterly distribution, which may be changed at any time. The practice
has no impact on the Fund’s investment strategy and may reduce the Fund’s NAV. However, the Advisor believes the practice
helps maintain the Fund’s competitiveness and may benefit the Fund’s market price and premium/discount to the Fund’s
NAV. The quarterly distribution rate began and ended the period at $0.0825 per share. Based on the $0.0825 per share quarterly distribution,
the annualized distribution rate at May 31, 2023 was 9.40% at NAV and 11.19% at market price. The final determination of the source and
tax status of all 2023 distributions will be made after the end of 2023 and will be provided on Form 1099-DIV. The foregoing is not to
be construed as tax advice. Please consult your tax advisor for further information regarding tax matters.
Market
and Fund Outlook
Although
the Fund and its investments often moved with a high correlation to the stocks of smaller lenders during the banking crisis, the direct
exposure to banking problems was actually quite limited. Before, during, and after the crisis, BDCs reported stable operating results
and we believe they should be well-positioned to take advantage of attractive lending opportunities as the banking industry regroups.
This scenario would position BDCs to extend their multi-quarter trend of elevated income and dividend distributions. Still, we are mindful
that higher interest rates may cause the economy to slow, which could erode the ability of borrowers to properly service their debt and
ultimately lead to higher loan defaults. Credit is one risk factor BDCs share with the banks, and it will remain an important one to monitor
in coming quarters.
BDCs
have survived, endured, and, in some ways, thrived through a variety of challenging environments, ranging from recessions to the pandemic,
rapidly tightening Fed policy, and now a banking crisis. They are certainly not bullet-proof, and some have experienced hardships from
these episodes. Nevertheless, we believe the BDC industry is resilient. The highly efficient way BDCs provide capital to the middle market
creates a differentiated return opportunity for their shareholders. It remains our pleasure to manage the Fund and we look forward to
delivering the unique opportunities offered from this industry.
Notes
to Financial Statements
First
Trust Specialty Finance and Financial Opportunities Fund (FGB)
May
31, 2023 (Unaudited)
1. Organization
First
Trust Specialty Finance and Financial Opportunities Fund (the “Fund”) is a diversified, closed-end management investment company
organized as a Massachusetts business trust on March 20, 2007, and is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the “1940 Act”). The Fund trades under the ticker symbol “FGB” on
the New York Stock Exchange (“NYSE”).
The
primary investment objective of the Fund is to seek a high level of current income. As a secondary objective, the Fund seeks an attractive
total return. The Fund pursues its investment objectives by investing, under normal market conditions, at least 80% of its Managed Assets
in a portfolio of securities of specialty finance and other financial companies that Confluence Investment Management LLC (“Confluence”
or the “Sub-Advisor”) believes offer attractive opportunities for income and capital appreciation. Under normal market conditions,
the Fund concentrates its investments in securities of companies within industries in the financial sector. “Managed Assets”
means the total asset value of the Fund minus the sum of its liabilities, other than the principal amount of borrowings. There can be
no assurance that the Fund will achieve its investment objectives. The Fund may not be appropriate for all investors.
2. Significant
Accounting Policies
The
Fund is considered an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board Accounting
Standards Codification Topic 946, “Financial Services-Investment Companies.” The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of the financial statements. The preparation of the financial statements
in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management
to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
A. Portfolio
Valuation
The
net asset value (“NAV”) of the Common Shares of the Fund is determined daily as of the close of regular trading on the NYSE,
normally 4:00 p.m. Eastern time, on each day the NYSE is open for trading. If the NYSE closes early on a valuation day, the NAV is determined
as of that time. Foreign securities are priced using data reflecting the earlier closing of the principal markets for those securities.
The Fund’s NAV per Common Share is calculated by dividing the value of all assets of the Fund (including accrued interest and dividends),
less all liabilities (including accrued expenses, dividends declared but unpaid and any borrowings of the Fund), by the total number of
Common Shares outstanding.
The
Fund’s investments are valued daily at market value or, in the absence of market value with respect to any portfolio securities,
at fair value. Market value prices represent readily available market quotations such as last sale or official closing prices from a national
or foreign exchange (i.e., a regulated market) and are primarily obtained from third-party pricing services. Fair value prices represent
any prices not considered market value prices and are either obtained from a third-party pricing service or are determined by the Pricing
Committee of the Fund’s investment advisor, First Trust Advisors L.P. (“First Trust” or the “Advisor”),
in accordance with valuation procedures approved by the Fund’s Board of Trustees, and in accordance with provisions of the 1940
Act and rules thereunder. Investments valued by the Advisor’s Pricing Committee, if any, are footnoted as such in the footnotes
to the Portfolio of Investments. The Fund’s investments are valued as follows:
Common
stocks, real estate investment trusts (“REITs”), and other equity securities listed on any national or foreign exchange (excluding
The Nasdaq Stock Market LLC (“Nasdaq”) and the London Stock Exchange Alternative Investment Market (“AIM”)) are
valued at the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing
price. Securities traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable,
at the close of the securities exchange representing the primary exchange for such securities.
Securities
traded in an over-the-counter market are valued at the close price or the last trade price.
Certain
securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Advisor’s Pricing
Committee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be
publicly sold without registration under the Securities Act of 1933, as amended) for which a third-party pricing service is unable to
provide a market price; securities whose trading has been formally suspended; a security whose market or fair value price is not available
from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the
value of the security after the market has closed but before the calculation of the Fund’s NAV or make it difficult or impossible
to obtain a reliable market quotation; and a security whose price, as provided by the third-party pricing service, does not reflect the
security’s fair value. As a general principle, the current fair value of a security would appear to be the amount which the owner
might reasonably expect to receive for the security upon its current sale. When fair value prices are used, generally they will differ
from
Notes
to Financial Statements (Continued)
First
Trust Specialty Finance and Financial Opportunities Fund (FGB)
May
31, 2023 (Unaudited)
Certain
losses realized during the current fiscal year may be deferred and treated as occurring on the first day of the following fiscal year
for federal income tax purposes. For the fiscal year ended November 30, 2022, the Fund did not incur any net late year ordinary losses.
The
Fund is subject to accounting standards that establish a minimum threshold for recognizing, and a system for measuring, the benefits of
a tax position taken or expected to be taken in a tax return. Taxable years ended 2019, 2020, 2021, and 2022 remain open to federal and
state audit. As of May 31, 2023, management has evaluated the application of these standards to the Fund and has determined that no provision
for income tax is required in the Fund’s financial statements for uncertain tax positions.
As
of May 31, 2023, the aggregate cost, gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation/(depreciation)
on investments (including short positions and derivatives, if any) for federal income tax purposes were as follows:
| Tax
Cost |
|
Gross
Unrealized
Appreciation |
|
Gross
Unrealized
(Depreciation) |
|
Net
Unrealized
Appreciation
(Depreciation) |
| $69,074,229
|
|
$3,988,338
|
|
$(15,593,477)
|
|
$(11,605,139)
|
E. Expenses
The
Fund will pay all expenses directly related to its operations.
3. Investment
Advisory Fee, Affiliated Transactions and Other Fee Arrangements
First
Trust, the investment advisor to the Fund, is a limited partnership with one limited partner, Grace Partners of DuPage L.P., and one general
partner, The Charger Corporation. The Charger Corporation is an Illinois corporation controlled by James A. Bowen, Chief Executive Officer
of First Trust. First Trust is responsible for the ongoing monitoring of the Fund’s investment portfolio, managing the Fund’s
business affairs and providing certain administrative services necessary for the management of the Fund. For these services, First Trust
is entitled to a monthly fee calculated at an annual rate of 1.00% of the Fund’s Managed Assets. First Trust also provides fund
reporting services to the Fund for a flat annual fee in the amount of $9,250.
Confluence
serves as the Fund’s sub-advisor and manages the Fund’s portfolio subject to First Trust’s supervision. The Sub-Advisor
receives a portfolio management fee at an annual rate of 0.50% of the Fund’s Managed Assets that is paid by First Trust from its
investment advisory fee.
Computershare,
Inc. (“Computershare”) serves as the Fund’s transfer agent in accordance with certain fee arrangements. As transfer
agent, Computershare is responsible for maintaining shareholder records for the Fund.
The
Bank of New York Mellon (“BNYM”) serves as the Fund’s administrator, fund accountant, and custodian in accordance with
certain fee arrangements. As administrator and fund accountant, BNYM is responsible for providing certain administrative and accounting
services to the Fund, including maintaining the Fund’s books of account, records of the Fund’s securities transactions, and
certain other books and records. As custodian, BNYM is responsible for custody of the Fund’s assets. BNYM is a subsidiary of The
Bank of New York Mellon Corporation, a financial holding company.
Each
Trustee who is not an officer or employee of First Trust, any sub-advisor or any of their affiliates (“Independent Trustees”)
is paid a fixed annual retainer that is allocated equally among each fund in the First Trust Fund Complex. Each Independent Trustee is
also paid an annual per fund fee that varies based on whether the fund is a closed-end or other actively managed fund, a target outcome
fund or an index fund.
Additionally,
the Lead Independent Trustee and the Chairs of the Audit Committee, Nominating and Governance Committee and Valuation Committee are paid
annual fees to serve in such capacities, with such compensation allocated pro rata among each fund in the First Trust Fund Complex based
on net assets. Independent Trustees are reimbursed for travel and out-of-pocket expenses in connection with all meetings. The Lead Independent
Trustee and Committee Chairs rotate every three years. The officers and “Interested” Trustee receive no compensation from
the Fund for acting in such capacities.
4. Purchases
and Sales of Securities
The
cost of purchases and proceeds from sales of securities, excluding short-term investments, for the six months ended May 31, 2023, were
$4,122,659 and $5,495,465, respectively.
Additional
Information
First
Trust Specialty Finance and Financial Opportunities Fund (FGB)
May
31, 2023 (Unaudited)
Dividend
Reinvestment Plan
If
your Common Shares are registered directly with the Fund or if you hold your Common Shares with a brokerage firm that participates in
the Fund’s Dividend Reinvestment Plan (the “Plan”), unless you elect, by written notice to the Fund, to receive cash
distributions, all dividends, including any capital gain distributions, on your Common Shares will be automatically reinvested by Computershare
Trust Company N.A. (the “Plan Agent”), in additional Common Shares under the Plan. If you elect to receive cash distributions,
you will receive all distributions in cash paid by check mailed directly to you by the Plan Agent, as the dividend paying agent.
If
you decide to participate in the Plan, the number of Common Shares you will receive will be determined as follows:
| (1)
|
If
Common Shares are trading at or above net asset value (“NAV”) at the time of valuation, the Fund will issue new shares at
a price equal to the greater of (i) NAV per Common Share on that date or (ii) 95% of the market price on that date. |
| (2)
|
If
Common Shares are trading below NAV at the time of valuation, the Plan Agent will receive the dividend or distribution in cash and will
purchase Common Shares in the open market, on the NYSE or elsewhere, for the participants’ accounts. It is possible that the market
price for the Common Shares may increase before the Plan Agent has completed its purchases. Therefore, the average purchase price per
share paid by the Plan Agent may exceed the market price at the time of valuation, resulting in the purchase of fewer shares than if the
dividend or distribution had been paid in Common Shares issued by the Fund. The Plan Agent will use all dividends and distributions received
in cash to purchase Common Shares in the open market within 30 days of the valuation date except where temporary curtailment or suspension
of purchases is necessary to comply with federal securities laws. Interest will not be paid on any uninvested cash payments. |
You
may elect to opt-out of or withdraw from the Plan at any time by giving written notice to the Plan Agent, or by telephone at (866) 340-1104,
in accordance with such reasonable requirements as the Plan Agent and the Fund may agree upon. If you withdraw or the Plan is terminated,
you will receive a certificate for each whole share in your account under the Plan, and you will receive a cash payment for any fraction
of a share in your account. If you wish, the Plan Agent will sell your shares and send you the proceeds, minus brokerage commissions.
The
Plan Agent maintains all Common Shareholders’ accounts in the Plan and gives written confirmation of all transactions in the accounts,
including information you may need for tax records. Common Shares in your account will be held by the Plan Agent in non-certificated form.
The Plan Agent will forward to each participant any proxy solicitation material and will vote any shares so held only in accordance with
proxies returned to the Fund. Any proxy you receive will include all Common Shares you have received under the Plan.
There
is no brokerage charge for reinvestment of your dividends or distributions in Common Shares. However, all participants will pay a pro
rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases.
Automatically
reinvesting dividends and distributions does not mean that you do not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized although cash is not received by you. Consult your financial advisor for more information.
If
you hold your Common Shares with a brokerage firm that does not participate in the Plan, you will not be able to participate in the Plan
and any dividend reinvestment may be effected on different terms than those described above.
The
Fund reserves the right to amend or terminate the Plan if in the judgment of the Board of Trustees the change is warranted. There is no
direct service charge to participants in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge
payable by the participants. Additional information about the Plan may be obtained by writing Computershare, Inc., P.O. Box 505000, Louisville,
KY 40233-5000.
Proxy
Voting Policies and Procedures
A
description of the policies and procedures that the Fund uses to determine how to vote proxies and information on how the Fund voted proxies
relating to portfolio investments during the most recent 12-month period ended June 30 is available (1) without charge, upon request,
by calling (800) 988-5891; (2) on the Fund’s website at www.ftportfolios.com;
and (3) on the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov.
Portfolio
Holdings
The
Fund files portfolio holdings information for each month in a fiscal quarter within 60 days after the end of the relevant fiscal quarter
on Form N-PORT. Portfolio holdings information for the third month of each fiscal quarter will be publicly available on the
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
There have been no material changes to the procedures
by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after
the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required
by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
I, James M. Dykas, certify that:
I, Donald P. Swade, certify that:
I, James M. Dykas, President and Chief Executive Officer
of First Trust Specialty Finance and Financial Opportunities Fund (the “Registrant”), certify that:
I, Donald P. Swade, Treasurer, Chief Financial Officer
and Chief Accounting Officer of First Trust Specialty Finance and Financial Opportunities Fund (the “Registrant”), certify
that:
N-2
|
6 Months Ended |
|
May 31, 2023
$ / shares
shares
|
|---|
| Cover [Abstract] |
|
| Entity Central Index Key |
0001392994
|
| Amendment Flag |
false
|
| Entity Inv Company Type |
N-2
|
| Document Type |
N-CSRS
|
| Entity Registrant Name |
First Trust Specialty Finance and Financial
Opportunities Fund
|
| General Description of Registrant [Abstract] |
|
| Investment Objectives and Practices [Text Block] |
The
primary investment objective of the Fund is to seek a high level of current income. As a secondary objective, the Fund seeks an attractive
total return. The Fund pursues its investment objectives by investing, under normal market conditions, at least 80% of its Managed Assets
in a portfolio of securities of specialty finance and other financial companies that Confluence Investment Management LLC (“Confluence”
or the “Sub-Advisor”) believes offer attractive opportunities for income and capital appreciation. Under normal market conditions,
the Fund concentrates its investments in securities of companies within industries in the financial sector. “Managed Assets”
means the total asset value of the Fund minus the sum of its liabilities, other than the principal amount of borrowings. There can be
no assurance that the Fund will achieve its investment objectives. The Fund may not be appropriate for all investors.
|
| Risk Factors [Table Text Block] |
Principal
Risks
The
Fund is a closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. The Fund
is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance
that the Fund will achieve its investment objectives. The following discussion summarizes the principal risks associated with investing
in the Fund, which includes the risk that you could lose some or all of your investment in the Fund. The Fund is subject to the informational
requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 and, in accordance therewith, files reports,
proxy statements and other information that is available for review.
Business
Development Company (“BDC”) Risk. The Fund invests in closed-end funds that have elected
to be treated as BDCs. Investments in BDCs may be subject to a high degree of risk. BDCs typically invest in small and medium-sized private
and certain public companies that may not have access to public equity markets or capital raising, and investments in these companies
present a greater risk of loss due to the companies’ youth and limited track record. BDCs are also generally more susceptible to
competition and economic and market changes due to limited products and market shares. A BDC’s portfolio could include a substantial
amount of securities purchased in private placements, and its portfolio may carry risks similar to those of a private equity or venture
capital fund. Securities that are not publicly registered may be difficult to value and may be difficult to sell at a price representative
of their intrinsic value. Investments in BDCs are subject to various risks, including management’s ability to meet the BDC’s
investment objective, and to manage the BDC’s portfolio when the underlying securities are redeemed or sold, during periods of market
turmoil and as investors’ perceptions regarding a BDC or its underlying investments change. Certain BDCs in which the Fund invests
employ the use of leverage in their portfolios through borrowings or in the issuance of preferred stock. While leverage often serves to
increase the yield of a BDC, the leverage also subjects the BDC to increased risks, including the likelihood of increased volatility and
the possibility that the BDC’s common share income will fall if the dividend rate on any preferred shares or the interest rate on
any borrowings rises. In addition, the market price for BDCs, together with other dividend paying stocks, may be negatively affected by
a rise in interest rates. Alternatively, declining interest rates could adversely impact the earnings of BDCs in which the Fund invests,
as new loan originations would likely be made at lower yields. BDC shares are not redeemable at the option of the BDC shareholder and,
as with shares of other closed-end funds, they may trade in the secondary market at a discount to their NAV.
Cyber
Security Risk. The Fund is susceptible to potential operational risks through breaches in cyber security.
A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information,
suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized
access to the Fund’s digital information systems through “hacking” or malicious software coding, but may also result
from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition,
cyber security breaches of the Fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with
direct
cyber security breaches. The Fund has established risk management systems designed to reduce the risks associated with cyber security.
However, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security
systems of issuers or third party service providers. Substantial costs may be incurred by the Fund in order to resolve or prevent cyber
incidents in the future.
Financial
Sector Concentration Risk. Under normal market conditions, the Fund concentrates its investments (i.e.,
invests at least 25% of its total assets) in securities of companies within industries in the financial sector. A fund concentrated in
a single industry or sector is likely to present more risks than a fund that is broadly diversified over several industries or groups
of industries. Compared to the broad market, an individual sector may be more strongly affected by changes in the economic climate, broad
market shifts, moves in a particular dominant stock, or regulatory changes. Specialty finance and other financial companies in general
are subject to extensive government regulation, which may change frequently and may have significant adverse consequences for financial
companies, including effects not intended by such regulation. The profitability of specialty finance and other financial companies
is largely dependent upon the availability and cost of capital funds, and may fluctuate significantly in response to changes in interest
rates, as well as changes in general economic conditions. From time to time, severe competition may also affect the profitability of specialty
finance and other financial companies. Financial companies can be highly dependent upon access to capital markets and any impediments
to such access, such as general economic conditions or a negative perception in the capital markets of a company’s financial condition
or prospects, could adversely affect its business. The impact of more stringent capital requirements, or recent or future regulation in
various countries, on any individual financial company or on financial companies as a whole cannot be predicted. Certain risks may impact
the value of investments in financial companies more severely than those of investments in other issuers, including the risks associated
with companies that operate with substantial financial leverage. Financial companies may also be adversely affected by volatility in interest
rates, loan losses and other customer defaults, decreases in the availability of money or asset valuations, credit rating downgrades and
adverse conditions in other related markets. Financial companies are also a target for cyber attacks and may experience technology malfunctions
and disruptions as a result. Leasing companies may be negatively impacted by changes in tax laws which affect the types of transactions
in which such companies engage.
Illiquid
Securities Risk. The Fund may invest in securities that are considered to be illiquid securities. Illiquid
securities may be difficult to dispose of at a fair price at the times when the Fund believes it is desirable to do so. The market price
of illiquid securities generally is more volatile than that of more liquid securities, which may adversely affect the price that the Fund
pays for or recovers upon the sale of such securities. Illiquid securities are also more difficult to value, especially in challenging
markets.
Income
and Interest Rate Risk. The income common shareholders receive from the Fund is based primarily on the
dividends and interest it earns from its investments, which can vary widely over the short and long-term. If prevailing market interest
rates drop, distribution rates of the Fund’s portfolio holdings may decline which then may adversely affect the Fund’s distributions
on its common shares as well. The Fund’s income also would likely be adversely affected when prevailing short-term interest rates
increase and the Fund is utilizing leverage.
Leverage
Risk. The use of leverage by the Fund can magnify the effect of any losses. If the income and gains
from the securities and investments purchased with leverage proceeds do not cover the cost of leverage, the return to the common shares
will be less than if leverage had not been used. Leverage involves risks and special considerations for common shareholders including:
(i) the likelihood of greater volatility of net asset value and market price of the common shares than a comparable portfolio without
leverage; (ii) the risk that fluctuations in interest rates on borrowings will reduce the return to the common shareholders or will result
in fluctuations in the dividends paid on the common shares; (iii) in a declining market, the use of leverage is likely to cause a greater
decline in the net asset value of the common shares than if the Fund were not leveraged, which may result in a greater decline in the
market price of the common shares; and (iv) when the Fund uses certain types of leverage, the investment advisory fee payable to the Advisor
and by the Advisor to the Sub-Advisor will be higher than if the Fund did not use leverage. To the extent the Fund uses leverage and invests
in BDCs that also use leverage, the risks associated with leverage will be magnified, potentially significantly.
Management
Risk and Reliance on Key Personnel. The implementation of the Fund’s investment strategy depends
upon the continued contributions of certain key employees of the Advisor and Sub-Advisor, some of whom have unique talents and experience
and would be difficult to replace. The loss or interruption of the services of a key member of the portfolio management team could have
a negative impact on the Fund.
Market
Discount from Net Asset Value. Shares of closed-end investment companies such as the Fund frequently
trade at a discount from their net asset value. The Fund cannot predict whether its common shares will trade at, below or above net asset
value.
Market
Risk. Securities held by the Fund, as well as shares of the Fund itself, are subject to market fluctuations
caused by factors such as general economic conditions, political events, regulatory or market developments, changes in interest rates
and perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments as a result of
the risk of loss associated with these market fluctuations. In addition, local, regional or global events such as war, acts of terrorism,
spread of
infectious
diseases or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments.
For example, the coronavirus (COVID-19) global pandemic and the aggressive responses taken by many governments, including closing borders,
restricting international and domestic travel, and the imposition of prolonged quarantines or similar restrictions, had negative impacts,
and in many cases severe impacts, on markets worldwide. While the development of vaccines has slowed the spread of the virus and allowed
for the resumption of reasonably normal business activity in the United States, many countries continue to impose lockdown measures in
an attempt to slow the spread. Additionally, there is no guarantee that vaccines will be effective against emerging variants of the disease.
Also, in February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility
within the markets in Russia, Europe and the United States. These hostilities and sanctions resulting from these hostilities could have
a significant impact on certain Fund investments as well as Fund performance. As the global pandemic and conflict in Ukraine have illustrated
such events may affect certain geographic regions, countries, sectors and industries more significantly than others. Recent and potential
future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence in financial
institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. These events also may adversely
affect the prices and liquidity of the Fund’s portfolio securities or other instruments and could result in disruptions in the trading
markets. Any of such circumstances could have a materially negative impact on the value of the Fund’s shares and result in increased
market volatility. During any such events, the Fund’s shares may trade at increased premiums or discounts to their net asset value
and the bid/ask spread on the Fund’s shares may widen.
Operational
Risk. The Fund is subject to risks arising from various operational factors, including, but not limited
to, human error, processing and communication errors, errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. The Fund relies on third parties for a range of services, including
custody. Any delay or failure relating to engaging or maintaining such service providers may affect the Fund’s ability to meet its
investment objective. Although the Fund and the Advisor seek to reduce these operational risks through controls and procedures, there
is no way to completely protect against such risks.
Potential
Conflicts of Interest Risk. First Trust, Confluence and the portfolio managers have interests which
may conflict with the interests of the Fund. In particular, First Trust and Confluence currently manage and may in the future manage and/or
advise other investment funds or accounts with the same or substantially similar investment objective and strategies as the Fund. In addition,
while the Fund is using leverage, the amount of the fees paid to First Trust (and by First Trust to Confluence) for investment advisory
and management services are higher than if the Fund did not use leverage because the fees paid are calculated based on managed assets.
Therefore, First Trust and Confluence have a financial incentive to leverage the Fund.
REIT,
Mortgage-Related and Asset-Backed Securities Risk. Investing in REITs involves certain unique risks
in addition to investing in the real estate industry in general. REITs are subject to interest rate risk (especially mortgage REITs) and
the risk of default by lessees or borrowers. An equity REIT may be affected by changes in the value of the underlying properties owned
by the REIT. A mortgage REIT may be affected by the ability of the issuers of its portfolio of mortgages to repay their obligations. REITs
whose underlying assets are concentrated in properties used by a particular industry are also subject to risks associated with such industry.
REITs may have limited diversification due to investment in a limited number of properties or a particular market segment and are subject
to the risks associated with obtaining financing for real property. REITs may have limited financial resources, their securities
may trade less frequently and in a limited volume, and their securities may be subject to more abrupt or erratic price movements than
larger company securities. Additionally, certain REITs charge management fees, which may result in layering of management fees paid by
the Fund.
In
addition to REITs, the Fund may invest in a variety of other mortgage-related securities, including commercial mortgage securities and
other mortgage-backed instruments. Mortgage-related securities are susceptible to adverse economic, political or regulatory events that
affect the value of real estate. Mortgage-related securities are also significantly affected by other factors such as borrower defaults,
delinquencies, realized or liquidation losses and other shortfalls. Rising interest rates tend to extend the duration of mortgage-related
securities, making them more sensitive to changes in interest rates, and may reduce the market value of the securities. In addition, mortgage-related
securities are subject to prepayment risk, the risk that borrowers may pay off their mortgages sooner than expected, particularly when
interest rates decline. This can reduce the Fund’s returns because the Fund may have to reinvest that money at lower prevailing
interest rates.
The
Fund’s investments in other asset-backed securities are subject to risks similar to those associated with mortgage-backed securities,
as well as additional risks associated with the nature of the assets and the servicing of those assets. In general, mortgage-related securities
and asset-backed securities are subject to credit risk, extension risk, interest rate risk, liquidity risk and valuation risk.
Specialty
Finance and Other Financial Companies Risks. The profitability of specialty finance and other financial
companies in which the Fund may invest is largely dependent upon the availability and cost of capital, and may fluctuate significantly
in response to
changes
in interest rates, as well as changes in general economic conditions. Any impediments to a specialty finance or other financial company’s
access to capital markets, such as those caused by general economic conditions or a negative perception in the capital markets or the
company’s financial condition or prospects, could adversely affect such company’s business. From time to time, severe competition
may also affect the profitability of specialty finance and other financial companies. Specialty finance and other financial companies
are subject to rapid business changes, significant competition, value fluctuations due to the concentration of loans in particular industries
significantly affected by economic conditions (such as real estate or energy) and volatile performance based upon the availability and
cost of capital and prevailing interest rates. In addition, credit and other losses resulting from the financial difficulties of borrowers
or other third parties potentially may have an adverse effect on companies in these industries.
Valuation
Risk. The valuation of the Fund’s investments may carry more risk than that of traditional common
stock. Uncertainties in the conditions of the financial market, unreliable reference data, lack of transparency and inconsistency of valuation
models and processes may lead to inaccurate asset pricing.
|
| Share Price |
$ 2.95
|
| NAV Per Share |
$ 3.51
|
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] |
|
| Outstanding Security, Title [Text Block] |
Common Shares outstanding (unlimited number of Common Shares has been authorized)
|
| Outstanding Security, Held [Shares] | shares |
14,367,591
|
| Business Development Company B D C Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Business
Development Company (“BDC”) Risk. The Fund invests in closed-end funds that have elected
to be treated as BDCs. Investments in BDCs may be subject to a high degree of risk. BDCs typically invest in small and medium-sized private
and certain public companies that may not have access to public equity markets or capital raising, and investments in these companies
present a greater risk of loss due to the companies’ youth and limited track record. BDCs are also generally more susceptible to
competition and economic and market changes due to limited products and market shares. A BDC’s portfolio could include a substantial
amount of securities purchased in private placements, and its portfolio may carry risks similar to those of a private equity or venture
capital fund. Securities that are not publicly registered may be difficult to value and may be difficult to sell at a price representative
of their intrinsic value. Investments in BDCs are subject to various risks, including management’s ability to meet the BDC’s
investment objective, and to manage the BDC’s portfolio when the underlying securities are redeemed or sold, during periods of market
turmoil and as investors’ perceptions regarding a BDC or its underlying investments change. Certain BDCs in which the Fund invests
employ the use of leverage in their portfolios through borrowings or in the issuance of preferred stock. While leverage often serves to
increase the yield of a BDC, the leverage also subjects the BDC to increased risks, including the likelihood of increased volatility and
the possibility that the BDC’s common share income will fall if the dividend rate on any preferred shares or the interest rate on
any borrowings rises. In addition, the market price for BDCs, together with other dividend paying stocks, may be negatively affected by
a rise in interest rates. Alternatively, declining interest rates could adversely impact the earnings of BDCs in which the Fund invests,
as new loan originations would likely be made at lower yields. BDC shares are not redeemable at the option of the BDC shareholder and,
as with shares of other closed-end funds, they may trade in the secondary market at a discount to their NAV.
|
| Cyber Security Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Cyber
Security Risk. The Fund is susceptible to potential operational risks through breaches in cyber security.
A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information,
suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized
access to the Fund’s digital information systems through “hacking” or malicious software coding, but may also result
from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition,
cyber security breaches of the Fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor,
as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with
direct
cyber security breaches. The Fund has established risk management systems designed to reduce the risks associated with cyber security.
However, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security
systems of issuers or third party service providers. Substantial costs may be incurred by the Fund in order to resolve or prevent cyber
incidents in the future.
|
| Financial Sector Concentration Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Financial
Sector Concentration Risk. Under normal market conditions, the Fund concentrates its investments (i.e.,
invests at least 25% of its total assets) in securities of companies within industries in the financial sector. A fund concentrated in
a single industry or sector is likely to present more risks than a fund that is broadly diversified over several industries or groups
of industries. Compared to the broad market, an individual sector may be more strongly affected by changes in the economic climate, broad
market shifts, moves in a particular dominant stock, or regulatory changes. Specialty finance and other financial companies in general
are subject to extensive government regulation, which may change frequently and may have significant adverse consequences for financial
companies, including effects not intended by such regulation. The profitability of specialty finance and other financial companies
is largely dependent upon the availability and cost of capital funds, and may fluctuate significantly in response to changes in interest
rates, as well as changes in general economic conditions. From time to time, severe competition may also affect the profitability of specialty
finance and other financial companies. Financial companies can be highly dependent upon access to capital markets and any impediments
to such access, such as general economic conditions or a negative perception in the capital markets of a company’s financial condition
or prospects, could adversely affect its business. The impact of more stringent capital requirements, or recent or future regulation in
various countries, on any individual financial company or on financial companies as a whole cannot be predicted. Certain risks may impact
the value of investments in financial companies more severely than those of investments in other issuers, including the risks associated
with companies that operate with substantial financial leverage. Financial companies may also be adversely affected by volatility in interest
rates, loan losses and other customer defaults, decreases in the availability of money or asset valuations, credit rating downgrades and
adverse conditions in other related markets. Financial companies are also a target for cyber attacks and may experience technology malfunctions
and disruptions as a result. Leasing companies may be negatively impacted by changes in tax laws which affect the types of transactions
in which such companies engage.
|
| Illiquid Securities Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Illiquid
Securities Risk. The Fund may invest in securities that are considered to be illiquid securities. Illiquid
securities may be difficult to dispose of at a fair price at the times when the Fund believes it is desirable to do so. The market price
of illiquid securities generally is more volatile than that of more liquid securities, which may adversely affect the price that the Fund
pays for or recovers upon the sale of such securities. Illiquid securities are also more difficult to value, especially in challenging
markets.
|
| Income And Interest Rate Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Income
and Interest Rate Risk. The income common shareholders receive from the Fund is based primarily on the
dividends and interest it earns from its investments, which can vary widely over the short and long-term. If prevailing market interest
rates drop, distribution rates of the Fund’s portfolio holdings may decline which then may adversely affect the Fund’s distributions
on its common shares as well. The Fund’s income also would likely be adversely affected when prevailing short-term interest rates
increase and the Fund is utilizing leverage.
|
| Leverage Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Leverage
Risk. The use of leverage by the Fund can magnify the effect of any losses. If the income and gains
from the securities and investments purchased with leverage proceeds do not cover the cost of leverage, the return to the common shares
will be less than if leverage had not been used. Leverage involves risks and special considerations for common shareholders including:
(i) the likelihood of greater volatility of net asset value and market price of the common shares than a comparable portfolio without
leverage; (ii) the risk that fluctuations in interest rates on borrowings will reduce the return to the common shareholders or will result
in fluctuations in the dividends paid on the common shares; (iii) in a declining market, the use of leverage is likely to cause a greater
decline in the net asset value of the common shares than if the Fund were not leveraged, which may result in a greater decline in the
market price of the common shares; and (iv) when the Fund uses certain types of leverage, the investment advisory fee payable to the Advisor
and by the Advisor to the Sub-Advisor will be higher than if the Fund did not use leverage. To the extent the Fund uses leverage and invests
in BDCs that also use leverage, the risks associated with leverage will be magnified, potentially significantly.
|
| Management Risk And Reliance On Key Personnel [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Management
Risk and Reliance on Key Personnel. The implementation of the Fund’s investment strategy depends
upon the continued contributions of certain key employees of the Advisor and Sub-Advisor, some of whom have unique talents and experience
and would be difficult to replace. The loss or interruption of the services of a key member of the portfolio management team could have
a negative impact on the Fund.
|
| Market Discount From Net Asset Value [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Market
Discount from Net Asset Value. Shares of closed-end investment companies such as the Fund frequently
trade at a discount from their net asset value. The Fund cannot predict whether its common shares will trade at, below or above net asset
value.
|
| Market Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Market
Risk. Securities held by the Fund, as well as shares of the Fund itself, are subject to market fluctuations
caused by factors such as general economic conditions, political events, regulatory or market developments, changes in interest rates
and perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments as a result of
the risk of loss associated with these market fluctuations. In addition, local, regional or global events such as war, acts of terrorism,
spread of
infectious
diseases or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments.
For example, the coronavirus (COVID-19) global pandemic and the aggressive responses taken by many governments, including closing borders,
restricting international and domestic travel, and the imposition of prolonged quarantines or similar restrictions, had negative impacts,
and in many cases severe impacts, on markets worldwide. While the development of vaccines has slowed the spread of the virus and allowed
for the resumption of reasonably normal business activity in the United States, many countries continue to impose lockdown measures in
an attempt to slow the spread. Additionally, there is no guarantee that vaccines will be effective against emerging variants of the disease.
Also, in February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility
within the markets in Russia, Europe and the United States. These hostilities and sanctions resulting from these hostilities could have
a significant impact on certain Fund investments as well as Fund performance. As the global pandemic and conflict in Ukraine have illustrated
such events may affect certain geographic regions, countries, sectors and industries more significantly than others. Recent and potential
future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence in financial
institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. These events also may adversely
affect the prices and liquidity of the Fund’s portfolio securities or other instruments and could result in disruptions in the trading
markets. Any of such circumstances could have a materially negative impact on the value of the Fund’s shares and result in increased
market volatility. During any such events, the Fund’s shares may trade at increased premiums or discounts to their net asset value
and the bid/ask spread on the Fund’s shares may widen.
|
| Operational Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Operational
Risk. The Fund is subject to risks arising from various operational factors, including, but not limited
to, human error, processing and communication errors, errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. The Fund relies on third parties for a range of services, including
custody. Any delay or failure relating to engaging or maintaining such service providers may affect the Fund’s ability to meet its
investment objective. Although the Fund and the Advisor seek to reduce these operational risks through controls and procedures, there
is no way to completely protect against such risks.
|
| Potential Conflicts Of Interest Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Potential
Conflicts of Interest Risk. First Trust, Confluence and the portfolio managers have interests which
may conflict with the interests of the Fund. In particular, First Trust and Confluence currently manage and may in the future manage and/or
advise other investment funds or accounts with the same or substantially similar investment objective and strategies as the Fund. In addition,
while the Fund is using leverage, the amount of the fees paid to First Trust (and by First Trust to Confluence) for investment advisory
and management services are higher than if the Fund did not use leverage because the fees paid are calculated based on managed assets.
Therefore, First Trust and Confluence have a financial incentive to leverage the Fund.
|
| R E I T Mortgage Related And Asset Backed Securities Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
REIT,
Mortgage-Related and Asset-Backed Securities Risk. Investing in REITs involves certain unique risks
in addition to investing in the real estate industry in general. REITs are subject to interest rate risk (especially mortgage REITs) and
the risk of default by lessees or borrowers. An equity REIT may be affected by changes in the value of the underlying properties owned
by the REIT. A mortgage REIT may be affected by the ability of the issuers of its portfolio of mortgages to repay their obligations. REITs
whose underlying assets are concentrated in properties used by a particular industry are also subject to risks associated with such industry.
REITs may have limited diversification due to investment in a limited number of properties or a particular market segment and are subject
to the risks associated with obtaining financing for real property. REITs may have limited financial resources, their securities
may trade less frequently and in a limited volume, and their securities may be subject to more abrupt or erratic price movements than
larger company securities. Additionally, certain REITs charge management fees, which may result in layering of management fees paid by
the Fund.
In
addition to REITs, the Fund may invest in a variety of other mortgage-related securities, including commercial mortgage securities and
other mortgage-backed instruments. Mortgage-related securities are susceptible to adverse economic, political or regulatory events that
affect the value of real estate. Mortgage-related securities are also significantly affected by other factors such as borrower defaults,
delinquencies, realized or liquidation losses and other shortfalls. Rising interest rates tend to extend the duration of mortgage-related
securities, making them more sensitive to changes in interest rates, and may reduce the market value of the securities. In addition, mortgage-related
securities are subject to prepayment risk, the risk that borrowers may pay off their mortgages sooner than expected, particularly when
interest rates decline. This can reduce the Fund’s returns because the Fund may have to reinvest that money at lower prevailing
interest rates.
The
Fund’s investments in other asset-backed securities are subject to risks similar to those associated with mortgage-backed securities,
as well as additional risks associated with the nature of the assets and the servicing of those assets. In general, mortgage-related securities
and asset-backed securities are subject to credit risk, extension risk, interest rate risk, liquidity risk and valuation risk.
|
| Speciality Finance And Other Financial Companies Risks [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Specialty
Finance and Other Financial Companies Risks. The profitability of specialty finance and other financial
companies in which the Fund may invest is largely dependent upon the availability and cost of capital, and may fluctuate significantly
in response to
changes
in interest rates, as well as changes in general economic conditions. Any impediments to a specialty finance or other financial company’s
access to capital markets, such as those caused by general economic conditions or a negative perception in the capital markets or the
company’s financial condition or prospects, could adversely affect such company’s business. From time to time, severe competition
may also affect the profitability of specialty finance and other financial companies. Specialty finance and other financial companies
are subject to rapid business changes, significant competition, value fluctuations due to the concentration of loans in particular industries
significantly affected by economic conditions (such as real estate or energy) and volatile performance based upon the availability and
cost of capital and prevailing interest rates. In addition, credit and other losses resulting from the financial difficulties of borrowers
or other third parties potentially may have an adverse effect on companies in these industries.
|
| Valuation Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Valuation
Risk. The valuation of the Fund’s investments may carry more risk than that of traditional common
stock. Uncertainties in the conditions of the financial market, unreliable reference data, lack of transparency and inconsistency of valuation
models and processes may lead to inaccurate asset pricing.
|