By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel consensus is bearish on OXLC due to its unsustainable yield, CLO reset wall, and potential liquidity risks. They disagree on the extent of these risks for SPPP and PSLV, with some considering them neutral due to their role as beta plays on metals and the potential for mean reversion.
Risk: Liquidity risk and the CLO reset wall for OXLC
Opportunity: Potential mean reversion in SPPP and PSLV
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Most investors love to talk about their winners. That's understandable, but it's still a shame, because losing investments can often teach us a lot more.
That's true no matter what you invest in: stocks, real estate--and, yes, 8%+ paying closed-end funds (CEFs), our favorite income plays.
With that in mind, let's look at three of the worst-performing CEFs of 2026 to see what they got wrong and how we can avoid holding such funds in the future.
I haven't chosen this trio at random; these three CEFs are the worst performers on the market so far and have market caps above $250 million. (Why $250 million? Because it's in the range of market caps we focus on at my CEF Insider service. Any fund smaller than, say, $200 million, can be volatile just on account of being thinly traded.)
Our first laggard: the Sprott Physical Platinum and Palladium Trust (SPPP), whose market price-based return and total NAV return (or the gains on its underlying portfolio, including dividends collected), have gone in the same direction--down--and fast.
A Straight-to-the-Bottom Drop
SPPP, as the name says, holds physical platinum and palladium. As such, it's a way for investors to own these metals without having to store and trade them. SPPP's drop is no surprise to us at CEF Insider: We discussed the risks of investing in metals a little over a year ago.
While we didn't talk about SPPP specifically, the physical-metal CEFs we did discuss--the ASA Gold and Precious Metals Fund (ASA), Sprott Physical Gold and Silver Trust (CEF) and Sprott Physical Gold Trust (PHYS)--are all down in 2026, as well, though none have fallen as far as SPPP (shown in purple below).
Investors Abandon Precious Metals in 2026
The reason comes down to an established pattern in gold and other precious metals. As we all know, gold soared in 2025, but that was a short-term phenomenon, which is typical when gold rises. It tends to go up sharply in a year, then retreat a bit the next year, and stay roughly flat for several years until its next move higher.
Investors aware of this fled these precious-metals funds before the new year in a (successful) bid to avoid the losses in the chart above.
The fact that SPPP performed worse than the rest is also unsurprising: The metals it focuses on are in a far worse slump than silver and gold.
Source: Yahoo Finance, CEF Insider
With that in mind, we shouldn't be surprised that SPPP has fallen so hard this year.
The second-worst CEF above $250 million in market cap is also unsurprising, because it focuses on silver, which has done worse than gold. The Sprott Physical Silver Trust (PSLV) does not have the most interesting portfolio: It consists of $12.6 billion in silver bars. As with SPPP, this makes buying into PSLV like buying into a stock of metal held in a vault somewhere. In SPPP's case, this comes with a 0.51% management fee.
With a 19.3% year-to-date NAV decline, PSLV has done worse than silver on the spot market, showing that investing in silver via a CEF has not been a winning ploy.
The losses are an injury, but there's an insult on top of this: Unlike the vast (vast!) majority of CEFs, neither SPPP nor PSLV pays a dividend. So it isn't like investors have gotten an income stream to tide them over while they wait for these funds to recover.
This is why diversification is important, and investing only in metals just doesn't make sense. But what you diversify into matters a lot, too, because some assets that might sound enticing are, in fact, mirages of wealth creation.
Oxford Lane Capital Corp. (OXLC) is another CEF we've warned about in the past, and with good reason: The stock price has collapsed 42.3% in 2026. This makes sense given the portfolio of collateralized loan obligations, or CLOs. These are a kind of debt derivative that can fall sharply if the Fed moves against them, and that's what's happened with OXLC.
OXLC's Seven-Month (and Counting) Disaster
The massive dividend the fund offers--a 27.8% yield on its current stock price--looks impressive, but that still means that an investor's year-to-date total return is negative 28.6%!
It gets worse, as the OXLC halved its dividend in April 2026. More cuts are likely.
Way back in 2020, we talked about a likely dividend cut at OXLC: "When that comes, many of OXLC's yield-thirsty investors will sell--and fast."
That's happening now.
OXLC has given investors a negative 15.7% return since I wrote that, and more losses are likely around the corner. It's true that you can recoup some of those declines with the huge payouts, but since those payouts are being cut, this fund is a true falling knife.
From Sells to Urgent Buys: 4 Funds Dropping Huge 9.9% Dividends
The 4 funds I'm urging all investors to buy today have none of the problems of the 3 funds above.
The time to buy them is now, while we can do so during this irrational market selloff. Click here and I'll tell you more about them and give you a Special Report revealing their names and tickers.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"These three CEFs are fundamentally challenged in the current rate and metals cycle, but the article overstates their permanent impairment to promote its own product."
The article correctly flags 2026 YTD carnage in SPPP (-30%+ est.), PSLV (-19.3% NAV), and OXLC (-42.3% price, -28.6% total return) as metals slumped post-2025 rally and CLOs suffered from higher-for-longer rates plus the April dividend halving. However, it cherry-picks worst performers above $250M market cap to sell its own 9.9% dividend CEF list while ignoring that physical-metal trusts have near-zero correlation to equities and OXLC's 27.8% yield still offers carry for patient CLO buyers if defaults stay low. Missing context: gold/silver seasonality is not deterministic, and CEF discounts can widen further in risk-off moves.
If the Fed begins cutting rates aggressively in H2 2026 and industrial demand rebounds, platinum/palladium and silver could snap back sharply, turning these 'losers' into 2027 winners while OXLC's CLO book benefits from tighter credit spreads, rendering the 'sell now' call premature.
"OXLC is a classic yield trap where dividend distributions are being funded by NAV erosion rather than sustainable portfolio cash flows."
The article correctly identifies the 'yield trap' inherent in OXLC, but conflates two distinct asset classes. SPPP and PSLV are essentially physical commodity storage vehicles, not active CEFs. Criticizing them for lacking dividends misses the point: they are beta plays on industrial and precious metals, not income-generating products. Meanwhile, OXLC’s 27.8% yield is a classic sign of NAV erosion; when a fund pays out significantly more than its underlying CLO portfolio generates in net interest margin, it is essentially returning capital to shareholders. Investors chasing this yield are ignoring the fundamental deterioration of the underlying collateral during a high-rate environment.
If the Fed pivots to a rapid easing cycle, the discount on CLO-focused funds like OXLC could compress violently as the cost of debt service drops, potentially triggering a massive short squeeze.
"OXLC's 27.8% yield is a red flag, not a feature—it signals the fund is returning capital faster than its CLO portfolio generates returns, making further dividend cuts inevitable and current holders likely to face principal loss even after collecting distributions."
This article conflates three distinct failure modes—commodity mean reversion, CLO credit stress, and CEF structure—into a generic 'sell losers' narrative. SPPP and PSLV failures are predictable: platinum/palladium and silver underperformed gold in 2025's rally, so 2026 reversion was mechanical, not a fund problem. OXLC is genuinely broken—a 27.8% yield masking -28.6% total return signals dividend unsustainability and likely further cuts. But the article's real tell is the paywall: it criticizes three funds then pivots to hawking four unnamed 'bargain' CEFs with 9.9% yields. That's a sales funnel, not analysis. The 'irrational selloff' framing is marketing.
If CLO spreads have widened structurally due to Fed policy, OXLC's dividend cuts may be prudent de-risking rather than distress—and the fund could stabilize at lower but sustainable payouts, making current prices legitimate value traps rather than falling knives.
"NAV declines and price moves are not the whole story; discount/narrowing dynamics and distribution sustainability will drive the next leg of returns."
The piece cherry-picks 2026 losers (SPPP, PSLV, OXLC) to warn against metals and CLO-linked funds, but it misses key dynamics: NAV vs market price and the role of discounts/premiums, which can swing positively even if NAV is down; mean reversion can unfold through discount narrowing or metal-price stabilization, offering upside separate from the NAV path. It also glosses over the income angle: SPPP/PSLV pay no dividend, limiting downside cushioning, while OXLC’s distribution may be unsustainable if credit conditions worsen. Liquidity and leverage risks are understated, and broad claims about “avoid all metals/CLOs” oversimplify a nuanced risk/return landscape.
The strongest counter is that these are structurally high-risk, not just cyclical low performers; discounts to NAV could stay wide for years, and a slower or failed rebound in metals or CLO credits could amplify losses, making the 'mean reversion' thesis uncertain at best.
"Liquidity-driven discount widening remains the unmentioned tail risk across all three names."
Claude's sales-funnel critique of the paywall is fair, yet everyone underplays second-order liquidity risk: if 2026 outflows from these CEFs accelerate redemptions or force OXLC to sell CLO paper into a thin bid, discounts could gap another 15-20% regardless of Fed cuts or metal rebounds. That structural liquidity premium was never priced in during the 2025 euphoria.
"OXLC's fundamental distress is driven by a 2026 CLO refinancing wall that makes dividend sustainability mathematically impossible, irrespective of market sentiment or liquidity."
Grok, your focus on liquidity risk is vital, but you're missing the primary catalyst: the CLO 'reset' wall. OXLC isn't just suffering from outflows; it faces a massive wave of underlying collateral refinancings in 2026. If credit spreads remain elevated, the weighted average cost of capital for these CLOs will crush equity-tranche distributions regardless of liquidity. I disagree with the 'short squeeze' optimism; this isn't just a sentiment play, it’s a fundamental math problem regarding cash flow coverage.
"OXLC's discount may already embed refinancing risk; the catalyst isn't the reset wave itself, but whether spreads compress enough to make it survivable."
Gemini's CLO reset wall is the lynchpin, but it's being treated as destiny rather than a pricing question. If spreads compress even 75bps from current levels—plausible in a Fed-cut scenario—refinancing math flips. The real issue: OXLC's discount already prices in distress; the question is whether it's *enough* distress. Grok's liquidity cascade risk is real, but it's a tail scenario if inflows stabilize. The base case is refinancing pressure, not redemption panic.
"Price can stay depressed due to NAV discount and liquidity risk even if CLO cash flows hold; only a favorable credit-cycle path and spread compression would reprice OXLC."
Gemini, the CLO reset wall is a real risk, but treating it as an inevitable math problem understates market dynamics. The decisive factor is discount-to-NAV and liquidity: even if underlying cash flows hold, wide NAV discounts and thin secondary markets can keep OXLC’s price depressed for years. A modest spread compression and inflows stabilization could rebalance the price, but that hinges on a more favorable credit-cycle path than your scenario assumes.
The panel consensus is bearish on OXLC due to its unsustainable yield, CLO reset wall, and potential liquidity risks. They disagree on the extent of these risks for SPPP and PSLV, with some considering them neutral due to their role as beta plays on metals and the potential for mean reversion.
Potential mean reversion in SPPP and PSLV
Liquidity risk and the CLO reset wall for OXLC