NONOF - BGY: A Good Way To Diversify Away From American Markets And Earn A High Yield

2024-01-29 05:46:06 ET

Summary

• The BlackRock Enhanced International Dividend Trust is a closed-end fund that offers high current income from foreign stocks.
• BGY's recent performance has been flat, but when considering distributions, it has delivered a 44.12% total return over the past five years.
• Investing in this fund can provide diversification and reduce risks associated with overexposure to the US market.
• The American market appears expensive relative to the rest of the world, so it is important not to put all your assets in it right now.
• The fund can probably sustain its distribution and is currently trading at a very attractive discount on net asset value.

The BlackRock Enhanced International Dividend Trust ( BGY ) is a closed-end fund that income-focused investors can employ in order to earn a very high level of current income from the assets in their portfolios without the need to sacrifice the potential upside of an investment in common equities. This fund is also one of the few closed-end funds that invests entirely in foreign stocks. Unlike most global funds, this one does not have any allocation to American equity securities. As such, this fund should work reasonably well as a way to diversify your portfolio internationally while still maintaining a high level of income. When we consider the strained valuations present in most American capital markets and the generally poor financial state of the American government, achieving this diversification may be a good idea for any investor who is interested in reducing their overall risks.

Unfortunately, the recent performance of the BlackRock Enhanced International Dividend Trust is nothing to write home about. Over the past five years, the fund's shares have been almost perfectly flat. As we can see here, shares of this fund are down 0.56% over the period. Also shown in the chart are the S&P 500 Index ( SP500 ), the iShares MSCI World ETF ( URTH ), and the iShares MSCI ACWI ex U.S. ETF ( ACWX ):

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