Avoiding Calamos Long/Short Equity & Dynamic Income Trust (CPZ): 4 Reasons Why

Calamos Long/Short Equity & Dynamic Income Trust (CPZ) is a closed-end fund that seeks high current income and risk-managed capital appreciation. Despite its launch in November 2019, CPZ has underperformed its peers and has a high expense ratio. The fund's performance has been negatively impacted by its focus on lower-quality debt and its use of leverage, which can amplify losses during market downturns.

Calamos Long/Short Equity & Dynamic Income Trust (CPZ), a closed-end fund launched in November 2019, has shown mixed performance since its inception. As of June 17, 2025, CPZ has a trailing total return of 12.76%, compared to the S&P 500's 2.33% over the same period [1]. Over the past year, CPZ has returned 20.19%, while the S&P 500 has returned 9.96%. These figures suggest that CPZ has outperformed the broader market over the short term but has lagged over the longer term.

Despite its focus on providing high current income and risk-managed capital appreciation, CPZ has underperformed its peers. This underperformance can be attributed to several factors. Firstly, the fund's high expense ratio has eroded its returns. Secondly, CPZ's investment strategy, which includes a focus on lower-quality debt, has been a significant contributor to its underperformance. Additionally, the fund's use of leverage has amplified losses during market downturns, further exacerbating its underperformance.

The fund's high expense ratio is a notable concern. Expense ratios are a significant factor in the overall return of an investment. A higher expense ratio means a larger portion of the investment's returns is eaten up by fees, leaving less for investors. This can be particularly detrimental for investors seeking high current income, as the fees can significantly reduce the net income generated by the fund.

Moreover, CPZ's focus on lower-quality debt has exposed the fund to higher default risks. Lower-quality debt typically offers higher yields but comes with a higher risk of default. During periods of market stress, these higher default risks can lead to significant losses for the fund. The fund's use of leverage has further amplified these risks, as leverage magnifies both gains and losses.

In conclusion, while CPZ offers the potential for high current income and risk-managed capital appreciation, its performance has been negatively impacted by its high expense ratio, focus on lower-quality debt, and use of leverage. Investors should carefully consider these factors before investing in CPZ or any other closed-end fund.

References:
[1] https://finance.yahoo.com/quote/CPZ/
[2] https://seekingalpha.com/article/4795460-cpz-4-reasons-why-i-would-avoid-this-cef?source=affiliate_program:stockanalysis.com&utm_medium=affiliate&utm_source=stockanalysis.com&affid=858&oid=16&transaction=e3a5f87843fc46feabe7b55d297102fe