WIA - Evaluating CEFs As Dry Powder Assets
A popular way to construct investment portfolios is to use a barbell approach, that is, combine higher- and lower-quality assets. This approach has a number of advantages. It provides diversification across the quality spectrum, opportunities for rebalancing and a source of dry powder to spend during drawdowns. Normally, this higher-quality allocation takes the form of government or investment-grade bonds.
In this article, we take a look at whether the few CEFs with significant government bond allocations can play this role in investor portfolios. In particular, we evaluate the following CEFs:
- MFS Government Markets Income Trust