CII - CII: Decent Income Fund But Don't Expect Much Growth Without Reinvesting Distributions

2024-01-27 06:39:55 ET

Summary

• BlackRock Enhanced Capital and Income Fund is an active covered call fund that has generated 462% in total returns since the early 2000s.
• The fund primarily invests in large cap and mega cap stocks, including top companies like Microsoft, Alphabet, Amazon, and Apple.
• CII writes covered calls against a portion of its positions, with an average overwrite rate of 50%, and has a current NAV discount of -5%.
• The fund beats most of its competition in total returns but lags behind overall index fund. It also lacks distribution growth.

BlackRock Enhanced Capital and Income Fund (CII) is one of the oldest covered call funds that's still active today. The fund has been around since the early 2000s and it generated 462% in total returns even though its share price has been mostly flat to slightly down during the same period. The fund slightly underperformed the total returns of the S&P 500 index ( SPY ) which had 524% in total returns during the same period but this is mostly expected since covered call funds tend to underperform the index in the long run....

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