DEFA14A: Madison Investments Partners with XA Investments to Boost Covered Call Equity Fund

Madison Investments and XA Investments have formed a strategic partnership where XA Investments will become the investment adviser for the Madison Covered Call and Equity Strategy Fund (MCN), while Madison Investments will continue as the sub-adviser.

Summary

• Madison Investments has partnered with XA Investments (XAI) to enhance the Madison Covered Call and Equity Strategy Fund (MCN).
• XA Investments will become the investment adviser for MCN, a $147 million listed closed-end fund.
• Madison Investments will remain involved as the sub-adviser, focusing on portfolio management.
• A special shareholder meeting is scheduled for October 15, 2024, to vote on the new advisory and sub-advisory agreements, as well as a new slate of trustees.
• The partnership aims to leverage XAI's expertise in closed-end funds to accelerate MCN's growth and improve its secondary market trading.
• Madison Investments manages approximately $26 billion in assets as of March 31, 2024.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the strategic partnership, expected growth, and the firms' commitment to delivering investment strategies. The management comments and the focus on shareholder benefits further contribute to the positive outlook.

Positives

• The partnership allows Madison Investments to focus on its core investment management capabilities and strategic growth priorities.
• XA Investments' expertise in closed-end funds is expected to improve MCN's secondary market trading and accelerate its growth.
• The partnership combines Madison Investments' portfolio management skills with XAI's product design capabilities.
• MCN has a 20-year track record, demonstrating experience in navigating market cycles.

Risks

• Shareholder approval is required for the new advisory and sub-advisory agreements to take effect.
• The success of the partnership depends on the effective collaboration between Madison Investments and XA Investments.

Future Outlook

The partnership between Madison Investments and XA Investments is expected to accelerate the growth of the Madison Covered Call and Equity Strategy Fund and bring additional investment strategies and products to investors.

Management Comments

• Steven Carl, Chair of Madison's Executive Committee, stated they are excited to partner with XA Investments and expect a durable partnership.
• Kimberly Flynn, President of XAI, is confident that XAI can help accelerate the growth of the Madison Covered Call and Equity Strategy Fund.

Industry Context

This partnership reflects a trend of asset managers seeking specialized expertise to enhance product offerings and distribution capabilities, particularly in the closed-end fund space. XAI focuses on alternative investment strategies and managers, which aligns with the growing investor interest in these areas.

Comparison to Industry Standards

• Madison Investments, with $26 billion AUM, is a mid-sized player compared to industry giants like BlackRock or Vanguard.
• XA Investments' focus on closed-end funds positions it similarly to firms like Nuveen or Eaton Vance, which have significant closed-end fund businesses.
• The covered call strategy employed by MCN is a common income-generating strategy, similar to funds offered by Allianz or BlackRock.

Stakeholder Impact

• Shareholders of MCN are expected to benefit from improved fund performance and secondary market trading.
• Madison Investments can focus on its core investment management activities.
• XA Investments expands its advisory business and gains access to a new fund.

Next Steps

• Shareholders of MCN will receive a proxy statement with additional information about the special shareholder meeting.
• MCN shareholders will vote on the new investment advisory agreement, subadvisory agreement, and slate of trustees at the special meeting on October 15, 2024.

Key Dates

Keywords

Madison Covered Call & Equity Strategy Fund, XA Investments, Madison Investments, Closed-End Fund, Investment Adviser, Sub-Adviser, Partnership, MCN