Dividend-News

Weekly Review: High-Yield CEFs - Buying HIX At 12.34% Discount Is The Way To Take 8.83% Yield

Published Tue, 29 Jan 2019 19:44:15 -0500 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
Тhe shorter trade week did not surprise us with any interesting directional movements or news. Indeed the benchmark of the high-yield bonds, the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) is hovering around the price of $84.20 per share. On a weekly basis, the main index reported a slight decrease of $0.09 or 0.11%. On top of that, the daily volume was relatively low compared to the previous weeks. After the loud climbing in the first weeks of the year, now the high-yield closed-end funds seem switched to quiet mode. If we do not see a new wave of panic about the credit risk of the assets and respectively sell-off, then it is very likely to see an additional increase in the prices of the funds in the sector.

Source: Barchart, iBoxx $ High Yield Corp Bond iShares
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