High Yield Spotlight

As conditions start looking less and less favorable for risk assets, investors would do well to start considering alternatives within their portfolios. Bonds, gold or cash usually come to mind first, but convertibles could also work. The Virtus Convertible & Income Fund (NCV) combines convertible securities with high yield bonds in order to maximize income potential.

Yields are no longer close to zero. The historic bear market due to the Fed’s aggressive rate hiking cycle appears to be over. But the direction of interest rates could realistically head in either direction. The BlackRock Floating Rate Income Trust (BGT) might seem like a logical fund to target in the CEF space, especially considering that it’s currently quoting an 11% distribution rate. But it’s not that simple.

The fixed income space has gotten increasingly complicated for investors. As inflation expectations have normalized, bond yields have come down accordingly. On the other hand, we’ve got a fair amount of evidence that the economy is slowing. That makes the bond market a dangerous place to play. The BlackRock Income Trust (BKT), which focuses on agency mortgage-backed securities, is one of those funds that could be in a good position or a bad position.