PDO - PIMCO Income Strategy Fund - Take Some Risk Off

• PFL is trading at a high premium to net asset value not seen in nearly 10 years.
• High-yield bond spreads vs. Treasuries are approaching lows touched in 2007 and 2014 - historically bad entry points for PFL.
• The fund is covering about 75% of distributions with investment income - doable if NAV is also increasing, but a problem if it is declining.
• PDO is a newly-issued fund trading closer to NAV. It also invests in riskier fixed-income sectors, but has shorter average maturity and lower leverage.
• I recently sold PFL and bought a smaller amount of PDO.

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