WDI - PHK: Decent Positioning And Portfolio But Expensive Given Bond Market Risks

2024-04-29 11:00:00 ET

Summary

• PIMCO High Income Fund offers a current yield of 12.03%, but other closed-end peer funds have higher yields.
• The fund's share price performance has been volatile but has outperformed domestic bond indices in recent months.
• The fund's leverage ratio is in line with its peers, and it has been able to cover its distributions through net unrealized gains.
• Bond funds like this one are looking better than they did at the end of December, but rate hikes are a real risk right now.
• The fund has failed to fully cover its distribution YTD and trades at a premium so caution is urged.

The PIMCO High Income Fund ( PHK ) is a closed-end fund that income-focused investors can employ as a means of achieving their goals. This seems only logical given that the name of the fund strongly implies that its intent is to provide its shareholders with a very high level of current income. The fund actually does pretty well here, as it yields 12.03% at the current share price, which is likely to be an incredibly attractive yield for anyone who is still accustomed to 7% or so being a “high yield” as was the case over most of the past fifteen years. However, the fund’s 12.03% current yield is a bit lower than many other closed-end funds that are employing a similar strategy:

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