I added some more fixed income to my allocation.
music selection: “Sweet Jane” — Cowboy Junkies
I got a pleasant surprise with filing my taxes. Tax loss harvesting wiped out my unfunded tax liability and put me in a stronger cash position. Coupled with below normal spending, I have accumulated some extra cash. I’ve decided to put about 2,500 back into the portfolio as fixed income. I’ll be deducting this amount from next month’s withdrawal rate calculation as it is no long withdrawn from the portfolio.
I like Closed End Funds for fixed income when they are trading below Net Asset Value (NAV). You can pick up some real bargains while also gaining broad diversification. I was able to get HNW for 15.11 a share. The prior day NAV was reported as 16.14 so I got in at a 6.38% to the underlying assets. My yield on cost basis is 9.13% annualized for this monthly payer.
The fund uses 30% leverage to boost returns and has about 27% of holdings in high yield corporate bonds. The rest is broadly diversified. The fund is well protected against a rising interest rate environment as duration is only 2.42 years. I may or may not beat the broad market with a long term buy and hold approach to HNW. I WILL enjoy a low Beta, consistent income, and a return well above the conventional 4% withdrawal rate. Paint me a happy lizard.
Devour your prey raptors!