BNDW - SCD: Still A Good Fund But The Buy Case Is Weakening (Rating Downgrade)
2024-07-14 10:40:37 ET
Summary
- LMP Capital and Income Fund offers high current income from equities with an 8.75% yield, higher than most market indices.
- The fund invests in equities, providing inflation protection, but its yield is lower compared to peers in the Hybrid-Global Allocation category.
- The Fund's leverage is reasonable at 19.95% of assets, distributions are sustainable, and shares trade at an 8.69% discount to net asset value.
- The shares have been outperforming the portfolio, suggesting that the valuation is not as attractive as it was a few months ago.
- This is still a very good equity fund for income investors, but it is getting difficult to make the case for aggressive buying today.
The LMP Capital and Income Fund ( SCD ) is a closed-end fund that investors can use to obtain a high level of current income from the assets that they already possess. The fund does reasonably well at this task, as it boasts an 8.75% yield that is significantly higher than the yield of most market indices:
| Fund/Index |
| Current Yield |
| LMP Capital and Income Fund |
| 8.75% |
| S&P 500 Index ( SP500 ) |
| 1.30% |
| MSCI World Index ( URTH ) |
| 1.51% |
| Bloomberg U.S. Aggregate Bond Index ( AGG ) |
| 3.45% |
| Vanguard Total World Bond ETF ( BNDW ) |
| 4.04% |
| Bloomberg High Yield Very Liquid Index ( JNK ) |
| 6.59% |