A Buy-Low Opportunity In A Volatile Market

A 10% Yield At A Discount Price

Every week, we’ll profile a high yield investment fund that typically offers an annualized distribution of 6-10% or more. With the S&P 500 yielding less than 2%, many investors find it difficult to achieve the portfolio income necessary to meet their needs and goals. This report is designed to help address those concerns.

I think it’s safe to say that the financial markets have changed considerably over the past week.

Even though the S&P 500 and Nasdaq 100 are getting most of the attention, this is especially true for the fixed income markets. Credit spreads are finally beginning to blow up. Treasuries had, for a brief time, been acting like a safe haven asset until China (probably) stepped in and started dumping them on to the market, sending yields shooting higher. It’s a little 2022-ish in that stocks and bonds are now declining together again, although it remains to be seen if the government or the Fed steps in to backstop some of this.

The junk bond market hasn’t reacted quite as negatively as one might expect given the change in spreads (the high yield spread figure commonly looked at by the market expanded by more than 100 basis points over the course of three days). The PGIM High Yield Bond Fund (ISD) has a comparatively more conservative portfolio, which could be of some benefit here, but it’s the characteristics of how closed-end funds typically trade in these environments that might provide the better opportunity.