Dividend-News

Weekly Review: High-Yield CEFs - Lack Of Significant Changes Among The Funds

Published Tue, 12 Nov 2019 21:12:13 -0500 on Seeking Alpha

Introduction
The closed-end funds from the high-yield sector significantly increased their prices over the past months. Currently, most of them are traded at positive Z-scores, which is an indication that they have lost most of their statistical edge. Still, they are traded at high discounts, but we are cautious when we select our positions due to the lack of statistical edge. For me, personally, I am in a waiting mode to see a statistical opportunity to review some of the funds.
The Benchmark
Just a slight change in the price of the main benchmark which we use to track the high-yield sector. Over the past week, the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) rose by $0.03 per share and finished the Friday session at $86.85 per share. The main index remains close to its highest levels for the year after the recent rate cut from the central bank of the U.S. The situation around trade deal negotiations seems calm, and the stock market reached a new all-time high. The seeking of higher yields may be a good foundation for the new positive impulse in the high-yield bonds sector in the next several weeks.

Source: Barchart, iShares iBoxx $ High Yield Corporate Bond ETF
Statistical Comparison And Spread Review Of The Sector
High-yield bonds are typically evaluated on the difference between their yield and the yield on the U.S. Treasury bond. High-yield spreads are used by investors and market analysts to evaluate the overall credit markets. Higher... Read more