Ellsworth Growth and Income Fund delivered a 34.72% net asset value total return for the fiscal year ended September 30, 2025, an outperformance of roughly 1,510 basis points against the ICE Bank of America U.S. Convertibles Index return of 19.60% and approximately 1,440 basis points over the Bloomberg Balanced U.S. Convertibles Index return of 20.34%. The fund sits inside the Gabelli complex and runs a higher-equity-sensitive convertible book than the convertible benchmark, with a portfolio delta of 75 versus 62 for the broader market, which is the structural reason the fund captured more of the equity rebound that began after the November 2024 election and extended through the first interest rate cut delivered at fiscal year end. The investment return, which captures price movement on the NYSE American listing, came in at 36.60%, reflecting a discount that compressed from a wider starting point and added to the price return on top of the asset value gain.
The first thesis variable is the convertible issuance cycle. New issue volume in fiscal 2025 was the strongest since 2020 and 2021, and the Gabelli team has been selectively participating, with the manager noting that some pricing has been driven by convertible arbitrage investors and that yields and premiums have moved against the buyer. The second thesis variable is the equity-sensitive tilt. Energy and utilities convertibles made up 20.2% of net assets, computer software and services convertibles made up 15.8%, and the common stock sleeve added another 15.5%, including a 3.5% position in Broadcom, 4.5% in cell tower REITs, and 4.2% in telecom carriers. The third thesis variable is the preferred share leverage stack. The Series A 5.25% cumulative preferred at $25 liquidation value and the smaller Series B 5.20% cumulative preferred at $10 liquidation value together provide approximately $30.3M of structural leverage, and the asset coverage ratio climbed to 688% at fiscal year end from 484% the prior year, a function of NAV appreciation rather than any new issuance.
What confirms the thesis is a continuation of the new issue calendar at a healthy pace, particularly in the total return segment where the manager has its largest concentration, paired with equity market multiple expansion that follows the inaugural rate cut of the cycle. What breaks the thesis is a sharp reversal in the energy and utilities convertibles that anchor the sleeve, since the manager's top contributors this year came disproportionately from Bloom Energy, MP Materials, SoFi, and Broadcom, or a re-acceleration of new issuance pricing that compresses portfolio yield below the 2.3% level where the convertible book currently sits. Discount compression has been a quiet tailwind this year, with the market price of $11.60 trading at an 11.3% discount to NAV of $13.08, and any re-widening of that discount would mute the investment return versus the NAV return and reset the entry point for income-oriented investors.