BTZ - BTZ: A Decent Multi-Sector Bond Fund But Lack Of Floaters A Risk

2024-03-12 13:41:10 ET

Summary

• BlackRock Credit Allocation Income Trust is a debt-focused closed-end fund that boasts a 9.23% current yield.
• The BTZ closed-end fund claims to invest in a combination of floating-rate and fixed-rate debt, but the portfolio is almost entirely in fixed-rate assets with floating-rate securities an afterthought.
• The BTZ fund substantially underperformed competing funds that are more flexible in the balance between floaters and fixed-rate bonds over the past three years.
• The fund did manage to fully cover its distributions for the FY2023 period, but it had to rely on net unrealized gains to accomplish that goal.
• The fund's shares have substantially outperformed its portfolio recently, but the shares still trade at a discount.

The BlackRock Credit Allocation Income Trust ( BTZ ) is a debt-focused closed-end fund, or CEF, that income-seeking investors can employ as a method of pursuing their goals. The fund does fairly well in this respect, as its current 9.23% yield is easily among the highest yields that can currently be obtained in the fixed-income space. CEF Data classifies the BlackRock Credit Allocation Trust as a multisector bond fund, so here is how the fund's yield compares to a selection of other closed-end funds that are classified in the same way:

For further details see: