AGG - FTHY: A Very Good Bond Fund For Retirement Income

2024-07-01 17:11:02 ET

Summary

• First Trust High Yield Opportunities 2027 Term Fund offers a 10.89% yield and is set to be liquidated in 2027.
• The TFHY closed-end fund underperformed bond indices over the past three years, but may provide capital gains as the termination date nears.
• The fund includes some foreign exposure, but not nearly as much as other global funds.
• The fund has failed to cover its distribution during the current fiscal year, but this is probably okay for a term fund.
• The fund's discount should narrow as the termination date approaches, and the fund's portfolio holdings will probably rise if interest rates are lower in 2027 than today.

The First Trust High Yield Opportunities 2027 Term Fund ( FTHY ) is a closed-end fund, or CEF, that income-focused investors can purchase as a method of achieving their goals. At least, it can help them achieve their income goals for a little while, since the fund is scheduled to be liquidated on August 1, 2027. That date is still three years away, though, so the fund could offer an investor a reasonably decent opportunity to lock in an attractive yield for the next few years. The fund’s yield is quite attractive too, as it currently boasts a 10.89% payout. Here is how that compares to some of the fund’s peers:

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