EMB - HYT: Risky And Expensive Compared To Peers
2025-05-07 10:00:13 ET
Summary
- The BlackRock Corporate High Yield Fund offers a 9.76% yield, higher than major bond indices but lower than many peer funds.
- The fund's recent performance has been slightly disappointing, with a 2.84% decline since November 2024, partly due to leverage amplifying losses.
- The market appears to be doubting a recession, but if one occurs, then junk bonds appear overpriced.
- The fund's distributions have not been fully covered by net investment income, raising concerns about sustainability and potential net asset value erosion.
- Trading at a 0.53% premium to net asset value, the fund is expensive compared to peers, making it unattractive for purchase at current prices.
The BlackRock Corporate High Yield Fund ( HYT ) is a closed-end fund that seeks to provide its investors with a very high level of current income. The fund does a reasonably good job at the provision of income as well, as its current yield of 9.76% is well above that of any of the major domestic or global bond indices:
Index/ETF |
Current Yield |
Bloomberg U.S. Aggregate Bond Index ( AGG ) |
3.82% |
Bloomberg High Yield Very Liquid Index ( JNK ) |
6.71% |
Vanguard Total World Bond ETF ( BNDW ) |
4.00% |
Vanguard Total International Bond Index Fund ETF Shares ( BNDX ) |
4.28% |
J.P. Morgan EMBI Global Core Index ( EMB ) |
5.33% |