CCD - CCD: A Better Way To Play Bonds, Albeit A Pricey One

2025-05-27 03:20:07 ET

Summary

• Calamos Dynamic Convertible and Income Fund offers strong real returns and high income, outperforming traditional fixed-income funds over the past decade.
• The fund's focus on convertible bonds enables both capital appreciation and income, with an attractive 11.06% yield and a reliable payout history.
• However, declining net asset value and a significant premium to NAV raise concerns about sustainability and current valuation versus peers.
• The bond market is clearly getting very worried as bond yields are rising despite the Fed trying to cut rates.
• Given CCD's high expense ratio and rich premium, I recommend waiting for a more attractive entry point before investing.

The Calamos Dynamic Convertible and Income Fund ( CCD ) is a closed-end fund that aims to provide its investors with a very high level of income as well as the potential for capital appreciation. This second point is a major one, as most fixed-income funds have failed to provide capital appreciation to any significant degree over the past decade. As we can see here, both the Bloomberg U.S. Aggregate Bond Index ( AGG ) and the Bloomberg High Yield Very Liquid Index ( JNK ) are down by more than 10% over the past decade:

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