Yields up to 16.27%.

I keep a target of 40% of my main trading portfolio in fixed income securities.  The broad equity markets decline around 50% (or more!) about once a decade.  The worst decline in the broad bond market going back to before the Great Depression is a hair over 6%.  Having this low volatility ballast is essential to surviving Sequence of Returns Risk (SoRR) for an early retiree.  Lots of people think they have to sacrifice return to gain this ballast but they are wrong.

Closed end funds are one sector of the market where you can find great diversification, great yields, and value in bonds.  A closed end fund does not necessarily trade at the same price as the underlying assets it holds.  So it is often possible to buy at a discount to Net Asset Value (NAV), effectively improving your margin of safety and yield.  Today, I highlight three closed end funds that I think offer great value while being yield rich.  Each has a yield better than the long term return on the S&P 500, while offering the security of bonds.

Virtus Global Multi-Sector Income Fund (VGI) is a closed end fund that seeks to maximize current income while preserving capital by investing in a portfolio of fixed income securities of U.S. and non-U.S.issuers.  It pays a managed distribution on a monthly basis.

  • Discount to NAV – 4.21%
  • Yield – 11.71%
  • Effective leverage – 27.52%
  • Expense ratio – 2.96%
  • Learn more

OFS Credit Company Income (OCCI) is a closed end fund that seeks  to generate current income, with a secondary objective to generate capital appreciation. Under normal market conditions, we will invest at least 80% of our assets, or net assets plus borrowings, in floating rate collateralized securities.  It pays a managed distribution on a monthly basis.

  • Discount to NAV – 10.73%
  • Yield – 11.97%
  • Effective leverage – none
  • Expense ratio – 0.37%
  • Learn more

Nuveen Credit Strategies Income (JQC) is a closed end fund that seeks high current income; and its secondary objective is total return.  It pays a managed distribution on a monthly basis.

  • Discount to NAV – 10.05%
  • Yield – 16.27%
  • Effective leverage – 36.53%
  • Expense ratio – 3.01%
  • Learn more

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Friday Fixed Income with yields up to 16.27%

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2 thoughts on “Friday Fixed Income with yields up to 16.27%

  • August 11, 2019 at 3:48 am

    Two of these have high leverage and 3% mgmt fees, the other is a CLO fund.

    I’ve lost a lot of respect for your analysis if you think any of these offer “the security of bonds”.

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