ARDC - ARDC: Solid Income Fund But Trades At A Historical Premium

2024-07-19 10:00:31 ET

Summary

• Ares Dynamic Credit Allocation Fund (ARDC) invests in a portfolio of different high yielding assets like bonds, loans, and CLOs.
• ARDC offers a 9.4% dividend yield and has shown a consistent distribution history, making it attractive for income investors.
• ARDC's portfolio benefits from floating rate investments and senior secured debt.
• However, the price now trades at a premium to NAV. The price has never traded at a premium over the last decade.
• Future interest rate cuts may ultimately serve as a catalyst that enables more portfolio growth since conditions are more attractive for borrowers.

Overview

Ares Dynamic Credit Allocation Fund ( ARDC ) operates as a closed end fund with the primary goal of providing a total return that is comprised of mostly income, followed by capital appreciation. The fund aims to achieve this by investing in different high yield strategies, including exposure to high yield bonds, debt investments such as senior secured loans, and CLOs (Collateralized Loan Obligations). However most of these investments are typically with companies that are rated below investment grade which may present an elevated level of risk. ...

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