GCV - ACV: Making The Right Moves In The Current Environment, But Very Expensive
2025-06-03 07:35:38 ET
Summary
- Virtus Diversified Income & Convertible Fund offers high income and equity exposure, favoring assets resilient to inflation and a weakening U.S. dollar.
- Convertible bonds and equities dominate the portfolio, providing better protection than traditional bonds, which are increasingly risky amid global debt and currency devaluation.
- The fund’s 9.81% yield is well-covered by income and gains, but its current premium to net asset value makes it expensive compared to historical and peer valuations.
- While the fund is fundamentally attractive for income and inflation protection, I recommend waiting for a price below net asset value before buying.
The Virtus Diversified Income & Convertible Fund ( ACV ) is a closed-end fund that provides its investors with a very high level of current income along with equity exposure. I have explained in previous articles why this is important, as equities have a much better chance of actually delivering positive real returns going forward. Equities have done a much better job of actually delivering a positive real return over the past decade, as shown here:
ACV: Making The Right Moves In The Current Environment, But Very Expensive