GOF - Here's Why the Guggenheim Strategic Opportunities Fund Slumped This Week
2023-10-19 12:17:51 ET
Shares in the Guggenheim Strategic Opportunities Fund (NYSE: GOF) declined by 13.6% in the week to Thursday at 11 a.m. The move comes as a bond market sell-off caused a drop in the fund's net asset value (NAV) and raised questions over the sustainability of its current monthly distribution.
I covered the fund in more detail in September when its NAV per share was $12.32, and the latest bond market sell-off has helped it decline to $11.66, in line with its current share price. It's essential to keep that figure in mind because the fund's current monthly distribution of $0.1821 annualizes to about $2.19. Putting that figure into context, it represents nearly 19% of its NAV.
That's not a sustainable distribution unless the closed-end fund's NAV significantly reverses its trend, and that's something hard to see given its holding of high-yield corporate bonds, bank loans, and asset-backed securities. When the bond market sells off (the yield on the 10-year Treasury is now at a multi-year high of 4.8%), high-yield debt is one of the first things sold off.
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Here's Why the Guggenheim Strategic Opportunities Fund Slumped This Week