PHT - EAD: This CEF Should Be A Good Source Of Income If The Bond Market Holds Up

2024-03-28 03:25:18 ET

Summary

• Allspring Income Opportunities Fund offers a 9.35% yield, comparable to other junk bond funds.
• The fund's shares have increased while the bond market and the fund's NAV have declined, but it still trades at a discount.
• EAD has a high percentage of assets invested in CCC or lower junk debt, which carries a higher risk of default.
• The Federal Reserve might not be able to cut interest rates despite its current messaging, and this fund is highly exposed to interest-rate risk.
• The fund failed to cover its distribution for two years in a row, but it is probably okay right now as long as the bond market holds up.

The Allspring Income Opportunities Fund ( EAD ) is a closed-end fund that investors can employ in order to earn a very high level of income from the assets in their portfolios. This fund is not exactly the most well-known junk bond fund on the market right now, but it does compare reasonably well with many of its peers on most metrics. We have seen this in a few previous articles in which I used this fund as a comparison source. We will see it again over the remainder of this article. As of right now, the Allspring Income Opportunities Fund boasts a 9.35% yield, which compares reasonably well to many comparable funds on the market. For example, consider the following peer comparison:

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