GUG - GUG: Potential Pressure On The Distribution But The CEF Looks Decent Right Now

2024-03-25 18:14:32 ET

Summary

• The Guggenheim Active Allocation Fund offers a current yield of 9.63%, which compares well to its peers in the "Hybrid-Global Allocation" fund category.
• The GUG closed-end fund's performance has been mixed, with shares up 3.87% since December 2023, but its portfolio has actually delivered a negative return over the period.
• The fund primarily invests in bonds and debt securities, with a small allocation to equities, and employs leverage to boost its yield and total return.
• The fund only managed to cover its distributions during the most recent reporting period due to unrealized capital gains and it appears to be giving some of those back.
• The GUG fund is currently trading at a discount on net asset value.

The Guggenheim Active Allocation Fund ( GUG ) is a closed-end fund, or CEF, that income-hungry investors can purchase as a method of pursuing their goals. The fund certainly appears to do a good job at this particular task, as its 9.63% current yield is attractive even in today's high-interest rate environment. In fact, this yield compares quite well to that of many of the company's peers. Morningstar classifies the Guggenheim Active Allocation Fund as a "Hybrid-Global Allocation" fund, so we will use that classification to establish a peer group for the fund. Here is how its current yield compares to some of its peers:

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