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Barings Global Short Duration High Yield Fund: Avoid At Narrow Discount To NAV

Published Wed, 11 Sep 2019 07:05:37 -0400 on Seeking Alpha

The Barings Global Short Duration High Yield Fund (NYSE: BGH) is a closed-end fund with current total assets under management at $365 million. The fund invests in short-term debt and credit securities seeking to maintain a weighted average portfolio duration of less than 3 years. What sets BGH apart from other short-duration funds is that its portfolio is exclusively comprised of high-yield or effectively "junk bonds" for the purpose of generating a high level of income. On one hand, the short-duration focus minimizes overall exposure to changes in interest rates, while the lower-rated securities represent higher credit risk. Investors may be attracted to the monthly distribution that currently yields 10%. While we like BGH and think it serves a good function by providing investors exposure to an important segment of fixed income, we highlight some concerns over the fund's volatility along with a historically narrow discount to NAV.

(Source: FinViz.com)
BGH Overview
BGH's primary objective is to seek a high a level of current income and capital appreciation. The fund invests globally, and beyond its general constraints, it does not have a stated benchmark. The defined strategy includes the following methodology:
Investing at least 80% of assets in corporate bonds, loans and other income-producing instruments that are rated below investment grade. A maximum of 50% of assets in foreign companies. Maintain a weighted average portfolio duration of 3 years or less.... Read more