JPIE - PYLD: CMOs Are Still Attractive Reiterate Buy

2024-06-21 15:26:06 ET

Summary

• PYLD is an actively managed fixed income ETF from PIMCO and highlights its advantages in the current market environment.
• PYLD offers a high distribution yield (5.96%) and the potential for further returns through active management.
• The fund benefits from its overweight allocation to CMOs (collateralized mortgage obligations) which are less sensitive to credit spreads compared to traditional bonds.
• Tight credit spreads, a current market condition, make PYLD less risky than funds heavily invested in corporate bonds (HY & IG).

Thesis

The market has rallied significantly this year, especially in fixed income. Both investment grade bonds and high yield bonds no longer offer attractive yields, with spreads contracting to historic lows. Many of our recent articles have highlighted this trend, moving covered CEFs and ETFs to hold or sell, based on their internal analytics and macro picture....

For further details see: