FT - Franklin Universal Trust: Utilities And High Yield Under One CEF Roof
2024-02-11 10:17:35 ET
Summary
- Franklin Universal Trust provides exposure to high-yield bonds and utilities, then offers an attractive distribution yield for investors.
- FT utilizes borrowings based on a fixed-rate, which recently matured and needed to be refinanced higher, though distribution coverage still remains relatively strong.
- The fund is currently trading at a deep discount but, on a relative basis, is only mildly attractive.
Written by Nick Ackerman, co-produced by Stanford Chemist.
Franklin Universal Trust ( FT ) provides exposure to both high-yield bonds and utilities. That combination can provide some fairly attractive yields for investors. However, similar to most equity closed-end funds, it will also require capital gains to achieve the fund's current 7.88% distribution yield. The fund is currently trading at a deep discount on an absolute basis. On a relative basis, it's looking fairly attractive, too, but not as much so.
FT Basics
- 1-Year Z-score: -1.65
- Discount: -12.57%
- Distribution Yield: 7.88%
- Expense Ratio: 2.78% (including leverage expenses)
- Leverage: estimated 24.01%
- Managed Assets: $249.86%
- Structure: Perpetual