RSF: A Unique Closed-End Fund with a 10% Distribution Yield

RiverNorth Capital and Income Fund (RSF) is a unique closed-end fund that offers a managed 10% distribution yield and an interval structure, allowing investors to buy and sell shares during specific intervals. As an interval fund, it is listed publicly for investors to purchase. RSF is managed by RiverNorth Capital, which has experience in alternative investment strategies.

RiverNorth Capital and Income Fund (RSF) stands out as a unique closed-end fund (CEF) with a managed 10% distribution yield and an interval structure. This structure allows investors to buy and sell shares during specific intervals, adding liquidity to the fund. RSF is managed by RiverNorth Capital, which has experience in alternative investment strategies.

RSF is an interval fund that is listed publicly, allowing investors to purchase shares throughout the trading day. The fund repurchases shares quarterly, between 5-25%, providing investors with a small portion of the net asset value (NAV) of their holdings regularly. This feature can be appealing, as it allows investors to realize a discount on the fund's trading price.

The fund's investment objective is to provide a high level of current income. RiverNorth Capital, the fund's advisor, invests in credit instruments, including a portfolio of securities of specialty finance and other financial companies. The fund has no restrictions on maturity or credit quality, providing flexibility in investment choices.

RSF's total net assets are relatively small, with $65.8 million in managed assets. The fund has experienced fluctuations in its NAV, with a 1.67 Z-score and a discount/premium of -4.98%. The fund's distribution yield is 11.04%, and its expense ratio is 3.02%. Leverage has been reduced to zero as of the end of June 2025.

The fund's primary investment is in small business whole loans, with a focus on Square. The fund has a wide range of rates and maturities, with the longest maturity extending to mid-2026. Previously, the fund held allocations to investment company debt, other CEFs, and SPACs. However, it has shifted its focus to small business loans.

RSF has conducted rights offerings in the past, which can be dilutive and impact the NAV. The latest rights offering, completed in July 2025, resulted in the issuance of 1,105,000 new shares of common stock. Gross proceeds from the offering are expected to total approximately $15.9 million [2].

Activist investors, such as Sit Investments and Karpus Management, hold significant stakes in the fund. Karpus has been selling out of the fund, while Sit Investments has been purchasing more recently. Their combined stake is around 38% of the fund.

Despite the challenges, RSF has put up relatively attractive total returns compared to fixed-income alternatives. It has outperformed the Bloomberg US Aggregate Bond Index and various ETFs, including iShares iBoxx Investment Grade Corporate Bond (LQD) and iShares iBoxx High Yield Corporate Bond ETF (HYG). Since its inception, RSF has shown strong performance, particularly during the COVID-19 period and post-COVID recovery.

References:
[1] https://seekingalpha.com/article/4816301-rsf-managed-10-percent-distribution-yield-and-unique-interval-structure
[2] https://www.businesswire.com/news/home/20250708620006/en/RiverNorth-Capital-and-Income-Fund-Inc.-Announces-Preliminary-Results-of-Transferable-Rights-Offering