INSI - BHK: Hold This CEF For An Attractive Yield While Watching For Insight Into Rates (Rating Upgrade)

2024-05-06 10:59:47 ET

Summary

• The BlackRock Core Bond Trust offers a high yield of 8.57%, outperforming the Bloomberg U.S. Aggregate Bond Index.
• Investment-grade bonds have struggled to provide a reasonable return over the past decade, but this particular fund has done okay in this respect.
• The fund's leverage has decreased, reducing potential risks, and its distribution has been covered by net investment income and capital gains.
• The worst is probably behind us now, as the market is currently pricing in far fewer rate cuts than it was at the start of the year. However, there could still be minor share price declines.
• The fund is currently trading at a premium on NAV, which appears to be unjustified.

The BlackRock Core Bond Trust ( BHK ) is a popular closed-end fund that is frequently employed by those investors who are seeking to earn a high level of income from the assets in their portfolios. It manages to do quite well at this task, as the fund's 8.57% yield is far above the 3.44% trailing yield of the Bloomberg U.S. Aggregate Bond Index ( AGG ). As the BlackRock Core Bond Trust achieves its objectives by investing in a portfolio of high-quality investment-grade bonds, the fact that its yield is well above the index tracking such securities is something that many potential investors would like to see. Its yield also compares pretty well with that of its peers:

For further details see: