Guggenheim Fund Faces Investor Lawsuit Over Distribution Practices

The report, published by The Bear Cave, characterizes the fund’s long-term strategy as a “Magic Money Machine,” claiming that management sold new shares at a premium to net asset value to bankroll dividends. By relying on this mechanism, the fund allegedly masked a portfolio that one former executive described as a “dumping ground” filled with illiquid, low-quality assets. Analysts warn that the collapse of this share-issuance model—which occurs when the market premium shrinks—could leave the fund without a viable source of capital for its payout obligations.

Hagens Berman partner Reed Kathrein is now leading an inquiry into whether Guggenheim Funds Investment Advisors and Guggenheim Partners Investment Management violated the Investment Company Act. The investigation seeks to determine if the firm intentionally misled investors regarding liquidity and investment quality, or if undisclosed related-party transactions occurred. Attorneys are currently soliciting information from whistleblowers and investors who incurred significant losses as the fund’s market position continues to face volatility.