The August 2025 Section 19(a) notice signals that the MEGI term fund will make a relatively large cash distribution – 10.5 % of the $14.29 market price (≈ 9.6 % of the $15.62 NAV). In practice, such a high‑yield payout tends to act as a “tax‑pull” for many investors: shareholders who are looking for cash flow or who wish to avoid a larger taxable event in the next quarter will often redeem their shares to capture the distribution in cash. Because the notice is already public, the redemption window is open and the fund’s liquidity will be tested. If a sizable portion of the existing base is income‑oriented (e.g., retirees, high‑yield seekers), we can expect a short‑term surge in redemptions, putting downward pressure on the market price and NAV as the fund sells assets to meet the outflows.
Conversely, the attractive 10 %‑plus distribution may also draw new capital from yield‑hungry investors, especially in a risk‑off environment where defensive, cash‑generating assets are prized. The key will be the net balance of inflows versus redemptions. Technically, MEGI has been trading near its recent highs on the back of the announced payout, but the price‑to‑NAV spread has narrowed (≈ ‑8 % discount), indicating limited upside unless the fund can sustain the yield without eroding capital. Actionable take‑away: monitor the fund’s redemption activity over the next 5‑10 business days; a spike in redemptions could create a short‑covering opportunity for traders betting on a bounce, while a net inflow flow would support the price and justify a modest long position or a buy‑the‑dip entry at the current $14.30 level. Keep an eye on broader market yield spreads – if Treasury yields rise, the relative attractiveness of MEGI’s distribution may diminish, prompting further redemptions.