OPP - OPP: Not The Best Time To Buy Despite The Sizable Discount

2024-03-21 13:15:05 ET

Summary

• The RiverNorth/DoubleLine Strategic Opportunity Fund has a high yield of 14.36%, which is higher than peers and makes it attractive to income-focused investors.
• The OPP closed-end fund's recent performance has been strong, with a 4.10% increase in share price since December 2023, outperforming bond indices.
• The fund's distribution has been declining, and it has failed to cover its distribution year-to-date.
• The Fed might not be able to reduce interest rates this year, as financial conditions are still very loose, which could cause problems given this fund's asset allocation.
• The OPP fund is trading at an enormous discount, but the risks here are higher than they seem.

The RiverNorth/DoubleLine Strategic Opportunity Fund ( OPP ) is a rather unique closed-end fund aka CEF that income-hungry investors can employ in their efforts to achieve their goals. The fund does very well in this respect, as it currently boasts a massive 14.36% yield, despite a recent distribution cut. Indeed, this yield is higher than just about any other closed-end fund that currently trades in the market.

Morningstar classifies the RiverNorth/DoubleLine Strategic Opportunity Fund as a taxable high-yield bond fund. As we will see in this article, this classification is perhaps not entirely accurate, but it is better than most other classifications that could be assigned to it. Here is how this fund’s yield compares to other closed-end funds that share the same classification:

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