BIT - BIT: Might Be Time To Sell (Rating Downgrade)

2024-07-03 05:52:52 ET

Summary

• The BlackRock Multi-Sector Income Trust generates high income from a multi-sector portfolio of fixed income securities.
• Investors who like the BIT fund appear to be too complacent, bidding credit spreads to cycle lows despite elevated defaults.
• With the economy slowing in 2024, I expect credit spreads to eventually catch up with defaults and negatively impact credit funds like the BIT.

A year ago, I wrote a cautious article on the BlackRock Multi-Sector Income Trust ( BIT ), shortly after the U.S. regional bank crisis, noting that the fund was heavily exposed to lower-rated credit securities heading into a slowing economy, which could make the fund vulnerable....

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