PFL - DSU: This Dynamic Credit Fund Is Positioned For 'Higher For Longer'

2024-03-14 05:44:11 ET

Summary

• The BlackRock Debt Strategies Fund offers a high level of income with a 10.64% yield, in line with other funds investing in fixed-rate and floating-rate debt securities.
• The fund's allocation to floating-rate securities and its ability to navigate interest rate movements make it attractive in a rising rate environment.
• The fund's distribution history has been variable, but it does appear that it can sustain it as long as interest rates remain at today's levels or increase.
• Recent economic data weakens the case for interest-rate cuts and provides support for the thesis that the fund's current asset allocation is a good one.
• The fund's shares currently appear to be too expensive. If they swing to a discount, the fund is deserving of a "Buy" rating.

The BlackRock Debt Strategies Fund ( DSU ) is a closed-end fund that can be purchased by investors who are seeking to earn a very high level of income from the assets in their portfolios. The fund certainly does quite well in this respect, as it boasts a 10.64% yield at the current share price, which is easily in line with other funds that invest in a combination of fixed-rate and floating-rate debt securities. For example, here are the yields currently possessed by some of this fund's peers:

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