Lazard ClosedEnd Funds 2022 Q2 Holdings Report
The second quarter of 2022 marked a pivotal period for Lazards suite of closedend funds (CEFs). Market volatility, shifting monetary policy, and sectorspecific dynamics created a backdrop in which portfolio managers adjusted allocations to preserve income while seeking upside potential. This page provides a concise yet comprehensive snapshot of the holdings, sector composition, and strategic insights for Lazards major CEFs as of June302022.
Key Themes in Q2 2022
- Higheryielding credit exposure: Managers increased positions in senior loan and highyield bond funds to capture widening spreads.
- Defensive equity tilt: Greater weight was given to consumer staples, healthcare, and utilities, reflecting demand for stable cash flow.
- Geographic diversification: European and Asian exposure was trimmed modestly, while NorthAmerican holdings grew.
- Liquidity management: A portion of the portfolio was shifted into cashequivalents and shortterm treasuries to mitigate drawdown risk.
Top Holdings by Fund
Lazard Global HighYield ClosedEnd Fund (LGCX)
| # | Holding | Sector | % of Net Assets | Market Value (USDm) |
|---|---|---|---|---|
| 1 | AT&T Inc. | Telecommunications | 5.2% | 212 |
| 2 | Ford Motor Co. | Automotive | 4.7% | 191 |
| 3 | Energy Transfer LP | Energy | 4.3% | 175 |
| 4 | Welltower Inc. | HealthCare REIT | 3.9% | 158 |
| 5 | Simon Property Group | Real Estate | 3.6% | 147 |
Lazard Global Equity Income ClosedEnd Fund (LGEC)
| # | Holding | Sector | % of Net Assets | Market Value (USDm) |
|---|---|---|---|---|
| 1 | Procter & Gamble Co. | Consumer Staples | 4.8% | 224 |
| 2 | Johnson & Johnson | HealthCare | 4.4% | 205 |
| 3 | NextEra Energy Inc. | Utilities | 4.1% | 191 |
| 4 | PepsiCo Inc. | Consumer Staples | 3.7% | 174 |
| 5 | Microsoft Corp. | Technology | 3.5% | 164 |
Sector Allocation Overview
The chart above summarizes the sector breakdown across Lazards primary closedend funds. Creditoriented funds lean heavily toward Energy (22%) and Financials (18%), while equityincome funds are dominated by Consumer Staples (28%) and HealthCare (20%). Technology exposure remains modest, reflecting a cautious stance amid valuation concerns.
Performance Snapshot
| Fund | Q2 2022 Return | YTD Return | 12Month Return | Distribution Yield |
|---|---|---|---|---|
| LGCX | -3.2% | -1.5% | +4.8% | 7.5% |
| LGEC | -2.1% | -0.8% | +5.3% | 6.8% |
| LGLX (Global LowVolatility) | -1.6% | -0.3% | +6.1% | 5.9% |
Even though Q2 was negative for most equity markets, the distribution yields held steady, underscoring the funds focus on income generation. The modest rebound in 12month returns reflects the benefits of the defensive tilt and disciplined credit selection.
Investment Strategy Highlights
Each Lazard CEF follows a disciplined, researchdriven process that blends fundamental analysis with quantitative risk controls.
- Credit Funds: Prioritize senior secured loans, highyield bonds, and structured credit that offer attractive spreads relative to riskfree rates. Duration is kept under three years to limit interestrate sensitivity.
- EquityIncome Funds: Target highdividend yield equities with strong cashflow generation, low payout ratios, and a history of dividend growth. Sector concentration is capped at 30% to avoid overexposure.
- LowVolatility Funds: Construct portfolios using a volatilityadjusted scoring model that emphasizes securities with beta below 0.8 and standard deviation below the market average.
Risk Management Practices
Risk is addressed on three fronts: market, credit, and liquidity.
- Market Risk: Portfolio managers employ valueatrisk (VaR) limits and stresstest scenarios (e.g., 10% equity market decline, 200basispoint rate hike) on a monthly basis.
- Credit Risk: Each credit position is reviewed for covenant strength, default probability, and recovery rates. The aggregate weightedaverage credit rating for LGCX remained at BBB in Q2, comfortably above the funds B+ minimum threshold.
- Liquidity Risk: A minimum of 7% of net assets is held in cash equivalents. Additionally, holdings are screened for average daily trading volume to ensure that the fund can meet redemption demands without significant price impact.
Outlook for the Remainder of 2022
Looking ahead, Lazards investment team anticipates a mixed environment:
- **InterestRate Environment:** The Federal Reserve is expected to continue a gradual tightening cycle. Credit managers will likely focus on assets with shorter duration and strong covenant protection.
- **Equity Markets:** Volatility may remain elevated as earnings guidance is revised. Defensive sectors are projected to outperform, while highgrowth technology could face continued pressure.
- **Income Generation:** Distribution sustainability will be a priority. Funds with robust cashflow coverage ratios will be favored for new purchases.
How to Access Detailed Holdings
Investors can obtain a full list of holdings, historical performance data, and prospectus documents via the official Lazard website:
Conclusion
The Q2 2022 holdings report illustrates Lazards commitment to balancing income, capital preservation, and selective growth. By reinforcing defensive sector positions, tightening credit standards, and maintaining disciplined liquidity buffers, the firm has positioned its closedend funds to navigate ongoing market turbulence while delivering attractive distribution yields. Investors seeking a blend of income and modest upside may find Lazards CEF suite a compelling addition to a diversified portfolio.
Lazard Funds 2022Q2 Holdings Alternatives and Reference File Download Link
