Highland Opportunities and Income Fund

James Dondero, as Chairman and co-founder of the NexPoint advisory platform, retains ultimate authority over the fund's portfolio allocation and investment committee decisions. The fund operates under an external advisory agreement with NexPoint Advisors, where Dondero sets the strategic direction across the credit and real estate verticals. Day-to-day origination and underwriting are handled by dedicated teams within NexPoint's Dallas headquarters, but major commitments and restructuring decisions flow through Dondero.

As a closed-end fund, the vehicle issues a fixed number of common shares that trade on the NYSE and does not redeem shares at an investor's request. This allows the portfolio to hold illiquid private credit and real estate assets that an open-end mutual fund's daily-redemption structure could not support. Shareholders enter and exit by buying or selling on the exchange, where the price can diverge meaningfully from net asset value — a premium during strong demand, a discount during selloffs.

NexPoint Advisors, L.P. serves as the fund's external investment adviser under a contractual agreement, and James Dondero controls NexPoint. The fund is one of several publicly listed vehicles in the NexPoint ecosystem, which also includes NexPoint Real Estate Finance (NYSE: NREF) and NexPoint Residential Trust (NYSE: NXRT). These entities can co-invest alongside one another in real estate and credit transactions, creating alignment — and occasional conflict-of-interest questions — between the adviser and its fund shareholders.

The portfolio is split between private credit instruments — senior-secured and mezzanine loans to middle-market companies — and structured real estate investments including preferred equity and bridge financing for multifamily, senior living, and hospitality properties. A residual sleeve holds publicly traded securities, typically acquired during market dislocations when management believes an asset's public-market price reflects a temporary discount to intrinsic value. Direct lending and real estate equity layered with debt-like protections define the bulk of the book.

Deal flow originates through NexPoint's Dallas-based real estate and credit origination teams, which operate across the Sun Belt's fragmented property and middle-market lending markets. The investment adviser's existing relationships with developers, operating partners, and regional banks give it access to off-market transactions and situations where borrowers require speed or structure that traditional lenders cannot provide. The club-deal nature of many larger investments also brings co-investment opportunities with other NexPoint-managed vehicles, though this concentration means a single adviser's view dominates the underwriting.

The fund's distributions are funded from net investment income and realized capital gains, both of which can fluctuate with the performance of the underlying private credit and real estate book. During the COVID-19 period and the rate-hiking cycle that followed, certain portfolio holdings — particularly hospitality and real estate assets — experienced stress that compressed distributable income, forcing a downward reset. The January 2024 increase to $0.05 per share signaled that portfolio-level cash flows had stabilized sufficiently for the board and adviser to raise the payout, though the level remains below the pre-2020 distribution rate.

Yes — as a closed-end fund, it can issue preferred shares and borrow through credit facilities to amplify investment capacity beyond common equity. Leverage magnifies both income available for distribution and the impact of asset-level losses on common shareholders. The fund's regulatory filings describe a leverage strategy intended to enhance yield, but the structure also means that a decline in underlying asset values can produce a disproportionate hit to net asset value per common share. The precise leverage ratio varies quarter to quarter based on portfolio composition and market conditions.