EVF - BGX: A Good Way To Earn A 10% Yield Regardless Of When The Fed Cuts

2024-07-23 18:13:25 ET

Summary

• Blackstone Long-Short Credit Income offers income-focused investors the ability to boost returns by shorting assets, unique among closed-end funds.
• The current yield of 10.03% may not be as attractive as other similar funds with higher yields, but it is still better than many other options.
• The BGX closed-end fund's leverage ratio of 31.83% is reasonable compared to peers, although it is very slightly higher than the last time that we discussed it.
• The fund trades discounted to net asset value right now, so the current price is decent.
• This fund should have lower interest-rate sensitivity than pure fixed-income options, so it might be worth considering avoiding betting on an early rate cut.

The Blackstone Long-Short Credit Income ( BGX ) is a closed-end fund, or CEF, that income-focused investors may wish to purchase as a method of pursuing their income goals. As the name of the fund suggests, this one can boost its returns by shorting assets to gain some benefits from leverage or earn profits from an asset declining in price. This is an option that is not available to most other closed-end funds, so it could theoretically give it better returns in poor market conditions, which works out better for long-term buy-and-hold investors.

Unfortunately, investors do not currently receive as attractive a yield as could be obtained with other funds that invest in similar assets. As of the time of writing, the Blackstone Long-Short Credit Income Fund boasts a 10.03% current yield. While this is higher than most fixed-income funds currently possess, there are several similar funds that boast significantly higher yields:

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