The RiverNorth Flexible Municipal Income Fund II, Inc. (the "Fund") seeks to provide current income exempt from regular U.S. federal income taxes1 with a secondary objective of total return.
While RiverNorth Capital Management, LLC ("RiverNorth") believes markets are generally efficient, closed-end funds offer a unique structure whereby investors can purchase a diversified fund and potentially generate additional return through the change in the relationship between the closed-end fund's market price and Net Asset Value (NAV)2. RiverNorth also believes combining a municipal closed-end fund strategy with an experienced municipal bond manager such as MacKay Municipal Managers™3 provides an attractive investment vehicle for investors.
Diversification does not ensure a profit or guarantee against loss.
RiverNorth allocates the Fund's managed assets between two principal strategies: Tactical Municipal Closed-End Fund Strategy (managed by RiverNorth) and Municipal Bond Income Strategy (managed by MacKay Shields).
RiverNorth Tactical Municipal Closed-End Fund Strategy
Seeks to generate returns through investments in investment companies primarily invested in municipal securities
Seeks to derive value from the discount and premium spreads associated with closed-end funds
Typically invests in municipal closed end funds (CEFs), and exchange traded funds (ETFs)
MacKay Shields Municipal Bond Income Strategy
Seeks to generate attractive risk-adjusted tax free income and total return through investments in municipal bonds
Targeted sources of alpha include security selection, sector rotation, yield curve positioning and duration management4
Primarily invests in investment grade municipal debt securities with the ability to invest in any credit quality, including securities that are rated below investment grade5
RiverNorth believes that complementary investment strategies may allow the Fund to opportunistically generate returns during varying market conditions.
Target portfolio asset allocations are shown for illustrative purposes only and actual allocations may be anywhere across a range.
The Fund is a municipal bond focused, closed-end fund seeking to provide:
Compelling tax-exempt monthly distributions through opportunistic investments in municipal bonds and municipal closed-end funds
Potential additional excess return from closed-end fund discount trading opportunities
Access to RiverNorth and MacKay Shields, two well-regarded investment advisers in their respective disciplines with complementary capabilities
The Fund also:
Primarily invests, directly or indirectly, in investment grade municipal bonds, under normal market conditions, with the ability to invest in securities of any credit quality, including securities rated below investment grade6
May use leverage* in order to enhance current income and capitalize on municipal market dislocations7
Has a fifteen-year term8
Intends to implement a Repurchase Plan9
Fund Information as of 8.31.2023
Bloomberg US Municipal Index10
Total Managed Assets*
Estimated Unhedged Duration11 (years)
Estimated Hedged Duration11 (years)
Limited Term and Eligible Tender Feature8
Beginning one year before February 26, 2036 (the "Termination Date"), the Fund may begin to liquidate all or a portion of the Fund's portfolio. At the discretion of the Board of Directors ("Board"), the Termination Date may be extended (i) once for up to one year, and (ii) once for up to an additional six months; or
Within twelve months prior to the Termination Date, the Fund may conduct a tender offer to purchase 100% of the then outstanding shares. Following the completion of the tender offer, the Fund must have at least $100 million of net assets. The Board may then eliminate the Termination Date and convert the Fund to a perpetual structure upon the affirmative vote of a majority of the Board
The Fund intends to implement a Repurchase Plan with respect to the Fund's common shares for a limited period following the Fund's initial public offering in an attempt to provide additional liquidity in the marketplace for the Fund's common shares. The Repurchase Plan is currently expected to commence approximately 60 days following the date on which the overallotment period ends and terminate on the earlier of (i) 90 days after the commencement of the Repurchase Plan, or (ii) the date on which the Fund has purchased under the Repurchase Plan 10% of the Common Shares issued in this offering. The Repurchase Plan will permit a broker-dealer acting as the Fund's agent to repurchase in the open market the Fund's common shares on the Fund's behalf when the Common Shares are trading at or below a specified level of discount to net asset value.
* Managed Assets means the total assets of the Fund, including assets attributable to leverage, minus liabilities (other than debt representing leverage and any preferred stock that may be outstanding). Such assets attributable to leverage include the portion of assets in tender option bond (TOB) trusts owned by the Fund that are TOB Residuals which has been effectively financed by the trust's issuance of TOB Floaters12. Please see the Fund's prospectus for further information.
Total Returns for the Period Ending 6.30.2023
RiverNorth Flexible Municipal Income Fund, Inc. Net Asset Value
RiverNorth Flexible Municipal Income Fund, Inc. Market Price
Bloomberg Municipal Bond Index10
Total Returns for the Period Ending 8.31.2023
RiverNorth Flexible Municipal Income Fund II, Inc. Net Asset Value
RiverNorth Flexible Municipal Income Fund II, Inc. Market Price
Bloomberg Municipal Bond Index10
Performance data quoted represents past performance, which is not a guarantee of future results. Current performance may be lower or higher than the performance quoted. The principal value and investment return of an investment will fluctuate so that your shares may be worth more or less than their original cost. You can obtain performance data current to the most recent month end by calling 844.569.4750. Total return measures net investment income and capital gain or loss from portfolio investments. All performance shown assumes reinvestment of dividends and capital gains distributions.
* Inception Date: 2.24.2021
Market price is the price that the Fund closed at on the primary listing exchange on the as-of date listed above.
NAV is the Net Asset Value of the Fund and equals the value of all the Fund's assets (less liabilities) divided by the number of shares outstanding.
The fund is new and has limited operating history.
Portfolio asset allocations are estimates made by the adviser and are subject to change.
John Loffredo, CFAExecutive Managing Director, Portfolio ManagerMacKay ShieldsRead full bio »
Robert DiMella, CFAExecutive Managing Director, Portfolio ManagerMacKay ShieldsRead full bio »
Mike PettySenior Managing Director, Portfolio ManagerMacKay ShieldsRead full bio »
David DowdenManaging Director, Portfolio ManagerMacKay ShieldsRead full bio »
Scott SprauerManaging Director, Portfolio ManagerMacKay ShieldsRead full bio »
Robert Burke, CFAManaging Director, Portfolio ManagerMacKay ShieldsRead full bio »
John LawlorManaging Director, Portfolio ManagerMacKay ShieldsRead full bio »
Disclosures & Definitions
Although the income from the Fund's municipal bond investments is generally exempt from federal income tax, you may owe taxes on any capital gains realized through the Fund's trading or through your own redemption of shares. For some investors, a portion of the Fund's income may be subject to state and local taxes, as well as to the federal alternative minimum tax.
Please consult your personal tax advisor regarding the tax implications of owning this Fund.
Risk is inherent in all investing. Investing in any investment company security involves risk, including the risk that you may receive little or no return on your investment or even that you may lose part or all of your investment. Therefore, before investing in the Common Shares, you should consider the risks as well as the other information in the prospectus.
More detailed information regarding these risks can be found in the Fund's prospectus.
Fund Risks: Credit Risk - a borrower may be unable to make interest or principal payments when they are due. Funds that invest in Municipal Bonds rely on the ability of the issuer to service its debt. This subjects the Fund to credit risk in that the municipal issuer may be fiscally unstable or exposed to large liabilities that could impair its ability to honor its obligations. Municipal issuers with significant debt service requirements, in the near-to mid-term, unrated issuers and those with less capital and liquidity to absorb additional expenses may be most at risk. To the extent the Fund invests in lower quality or high yield Municipal Bonds, it may be more sensitive to the adverse credit events in the municipal market. The treatment of municipalities in bankruptcy is more uncertain, and potentially more adverse to debt holders, than for corporate issues. Interest Rate Risk - the value of Municipal Bonds, similar to other fixed income securities, will likely drop as interest rates rise in the general market. Conversely, when rates decline, bond prices generally rise.
Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against loss.
An investment in the Fund is not appropriate for all investors and is not intended to be a complete investment program. The Fund is designed as a long-term investment and not as a trading vehicle.
Investors should consider the Fund's investment objective, risks, charges and expenses carefully before investing. The prospectus should be read carefully before investing. For more information, please read the prospectus, call your financial professional or call 844.569.4750.
The fund is a closed-end fund and closed-end funds do not continuously issue shares for sale as open-end mutual funds do. Since the initial public offering, the Fund now trades in the secondary market. Investors wishing to buy or sell shares need to place orders through an intermediary or broker. The share price of a closed-end fund is based on the market's value.
CFA® is a trademark owned by the CFA Institute.
1 May be includable in taxable income for purposes of the Federal alternative minimum tax.
2 The price at which a closed-end fund trades often varies from its NAV. Some funds have market prices below their net asset values - referred to as a discount. Conversely, some funds have market prices above their net asset values - referred to as a premium.
3 MacKay Municipal Managers™ is a trademark used by a portfolio management team within MacKay Shields LLC ("MacKay Shields").
4 Alpha is a measure of performance on a risk-adjusted basis. The excess return of a fund relative to the return of the benchmark index is a fund’s alpha.
5 Investments may include securities that have a rating that is below investment grade, including "high yield" securities, which are bonds that have adequate capacity to meet financial commitments, but are more subject to adverse economic conditions or changing circumstances, as defined by Nationally Recognized Statistical Rating Organizations ("NRSRO"), such as Fitch. All bonds are subject to interest rate risk. If rates increase, the value generally declines.
6 See prospectus for concentration limits with respect to the Fund's direct investments in municipal bonds, although such exposure could be greater after factoring in the investments of the Underlying Funds in which the Fund may invest. The Fund, and the Underlying Funds in which the Fund invests, may invest in securities of any credit quality, including securities that are rated below investment grade that receive the lowest ratings from nationally recognized statistical rating organizations.
7 Leverage is a speculative technique that exposes a closed-end fund to greater risk and increased costs than if it were not used. The use of leverage may cause greater volatility in the level of a closed-end fund's NAV, market price and distributions on its common shares. Leverage will also result in higher fees to the closed-end fund manager because the amount of assets under management will be included in the Fund's managed assets. There can be no assurance that a closed-end fund will use leverage or that its leveraging strategy will be successful during any period in which it is employed.
8 The Fund will terminate on or before February 26, 2036 (the "Termination Date"); provided, that if the Board of Directors("Board") believes that, under then-current market conditions, it is in the best interests of the Fund to do so, the Fund may extend the Termination Date: (i) once for up to one year (i.e., up to February 26, 2037), and (ii) once for up to an additional six months (i.e., up to August 26, 2037), in each case upon the affirmative vote of a majority of the Board and without common stockholder approval. In addition, as of a date within twelve months preceding the Termination Date, the Board may cause the Fund to conduct a tender offer to all common stockholders to purchase Common Shares of the Fund at a price equal to the net asset value per Common Share on the expiration date of the tender offer (an "Eligible Tender Offer"). The Board has established that, following an Eligible Tender Offer, the Fund must have at least $100 million of net assets to ensure the continued viability of the Fund (the "Termination Threshold"). In an Eligible Tender Offer, the Fund will offer to purchase all Common Shares held by each common stockholder; provided, that if the number of properly tendered Common Shares would result in the Fund's net assets totaling less than the Termination Threshold, the Eligible Tender Offer will be terminated and no Common Shares will be repurchased pursuant to the Eligible Tender Offer. Instead, the Fund will begin (or continue) liquidating its portfolio and proceed to terminate on or before the Termination Date. Following the completion of an Eligible Tender Offer, the Board may eliminate the Termination Date upon the affirmative vote of a majority of the Board and without a Common Shareholder approval. In making a decision to eliminate the Termination Date to provide for the Fund's perpetual existence, the Board will take such actions with respect to the continued operations of the Fund as it deems to be in the best interests of the Fund, based on market conditions at such time, the extent of Common Shareholder participation in the Eligible Tender Offer and all other factors deemed relevant by the Board in consultation with RiverNorth.
9 The Fund intends to implement a Repurchase Plan with respect to the Fund's common shares for a limited period following the Fund's initial public offering in an attempt to provide additional liquidity in the marketplace for the Fund's common shares. The Repurchase Plan is currently expected to commence approximately 60 days following the date on which the overallotment period ends and terminate on the earlier of (i) 90 days after the commencement of the Repurchase Plan, or (ii) the date on which the Fund has purchased under the Repurchase Plan 10% of the Common Shares issued in this offering. The Repurchase Plan will permit a broker-dealer acting as the Fund's agent to repurchase in the open market the Fund's common shares on the Fund's behalf when the Common Shares are trading at or below a specified level of discount to net asset value.
10 The Bloomberg US Municipal Index is considered representative of the broad market for investment grade, tax-exempt bonds with a maturity of at least one year. The index cannot be invested in directly and does not reflect fees and expenses.
11 Estimated Duration: Duration is a measure of the sensitivity of the price of a fixed income investment to a change in interest rates. Duration is expressed as a number of years. Duration is estimated by the adviser based on certain assumptions from third-party data and is subject to change. The difference between Unhedged and Hedged duration is that hedged duration includes the effect of a short US Treasury Futures position used to manage interest rate risk.
12 A Tender Option Bond (TOB) Issuer typically issues two classes of beneficial interests: short-term floating rate notes ("TOB Floaters"), which are sold to third party investors, and residual interest municipal tender option bonds ("TOB Residuals"), which are generally issued to the Fund. The Fund may not invest more than 5% of its Managed Assets in any single TOB Issuer. Please see the Fund's prospectus for further information.
Investors should consider the investment objective, risks, and charges and expenses of RiverNorth's mutual funds carefully before investing. To
obtain a prospectus containing this and other important information, please call 888.848.7569 or visit rivernorth.com. Please read the prospectus
carefully before investing.
RiverNorth's mutual funds are distributed by ALPS Distributors, Inc. Member FINRA. ALPS Distributors, Inc. is unaffiliated with RiverNorth Capital Management,
LLC, DoubleLine Capital LP or Oaktree Capital Management, L.P.
Investing involves risk and the potential loss of capital.
are registered trademarks of RiverNorth Capital Management, LLC.