Dividend-News

Weekly Review: High-Yield CEFs - This Fund Seems Undervalued Relative To Peers

Published Wed, 26 Sep 2018 10:07:10 -0400 on Seeking Alpha

Introduction The opportunities in closed-end funds over the last few months caught the eye of many investors. Most of these products are designed to provide a steady stream of income, usually on a monthly or quarterly basis, as opposed to the biannual payments provided by individual bonds. And this feature continues to attract market participants even when the overall market looks unstable.
In spite of CEFs being mostly of interest to income investors, we have found our path to approach them as active traders and we are constantly monitoring them. As a testament to this, you will be kept up to date with Weekly Reviews such as the one below.
The Benchmark On a weekly basis, the price of the main index, the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEARCA: HYG), fell by $0.09. Despite this fact, the price of the main benchmark remains close to the highest levels for the current year and pretty soon we can expect to see a test of the resistance levels around $86.55. Several times we were about to see a test of these levels, but the breakout is still only a reverie.
Over the past month, most of the fixed income assets suffered from the rising yields. As you see from the chart below, there was not such a significant reflection of such in the high-yield sector. I would like to spend some time covering several advantages of high-yield bonds and closed-end funds, which invest in this asset class. As the high-yield sector generally has a low correlation to other sectors of... Read more