Ahead of the critical Special Meeting on July 30, 2026, XA Investments (XAI) is reaching out directly to shareholders of the XAI Floating Rate & Alternative Income Trust (XFLT) to set the record straight. Kimberly Flynn, President of XAI, has released a series of videos aimed at countering recent misleading claims made by Octagon Credit Investors, the trust’s former sub-adviser. The core of the matter involves a decisive shift in leadership; the Board of Directors has unanimously recommended that shareholders vote “FOR” the transition to a new investment sub-adviser: Rockford Tower Asset Management, a subsidiary of the global firm King Street Capital Management. This vote is framed as a necessary step to restore stability and performance to the fund after a period of significant concern under previous management.
The motivation behind this transition is deeply rooted in performance struggles that have plagued the fund for years. Since the inception of XFLT in 2017, Octagon had total control over investment decisions, and the results have been troubling. According to Flynn, the fund’s net asset value (NAV) per share has suffered an erosion of approximately 54.40%, representing a staggering $406.7 million in lost value as of March 2026. For a fund designed to provide steady income and growth, such a steep decline is difficult for any investor to overlook, highlighting a systemic failure in the investment strategy that had been in place since the fund’s early days.
The situation grew even more alarming due to recent reports regarding the credit quality of the assets held under Octagon’s tenure. In mid-June 2026, S&P Global Ratings identified that seven debt tranches across five of Octagon’s Collateralized Loan Obligations (CLOs) had defaulted. To put this in perspective, defaults in the CLO market are incredibly rare and usually viewed as a sign of significant mismanagement. For instance, in both 2024 and 2025, global default numbers for rated CLO tranches remained in the single digits—between five and six annually. The fact that Octagon managed to exceed that global total in a single year raises major alarms about the risk management protocols that were—or were not—being followed.
To move past this era of instability, the Board conducted a comprehensive and competitive search for a new partner, ultimately selecting Rockford Tower (King Street). King Street brings a vastly different scale of expertise to the table, managing over $30 billion in assets and boasting a much larger team of dedicated credit professionals than the previous firm. Their experience is truly global, encompassing 20 U.S. CLOs and 9 European CLOs. This depth of talent and institutional reach is exactly what the Board believes is required to navigate the current complexities of the credit markets and to protect the interests of those who have invested their capital in XFLT.
The proposed change is intended to be more than just a personnel swap; it is a fundamental shift toward a more modern and dynamic strategy. Under the management of Rockford Tower, XFLT plans to broaden its investment horizons, moving into new, income-focused opportunities like European asset-backed securities and a wider variety of bank loans. By expanding the fund’s scope, the new team aims to move away from the restrictive and underperforming tactics of the past, seeking to create a more resilient portfolio that is better positioned to generate income while managing the inherent volatility of the alternative credit market.
As the July 30 deadline approaches, XAI is making it as seamless as possible for shareholders to cast their votes. They are strongly urging stakeholders to use their WHITE proxy cards to vote in favor of the new sub-advisory agreement. Shareholders can participate via the internet, over the phone, or by returning the physical proxy card by mail. For those who need help or have questions regarding the transition, the firm has enlisted Okapi Partners to provide additional support. This vote represents a pivotal moment for XFLT, as investors must decide whether to continue with the status quo or embrace this new path toward professional oversight and a more proactive, global investment strategy.