GUG - TBLD: This Underfollowed CEF Looks Like A Good Choice For Income-Seekers

2024-05-23 17:13:46 ET

Summary

• Thornburg Income Builder Opportunities Trust is a unique closed-end fund that invests in a combination of fixed-income and equity securities.
• The fund struggles to deliver a yield on par with the best fixed-income closed-end funds due to the lower yields of common equities.
• The fund has paid consistent distributions and has covered them over the past year and a half, making it an attractive option for income-seeking investors.
• The fund's portfolio is very different from that of most other closed-end funds, so it can add a degree of diversification to any portfolio.
• The fund is trading at a very attractive discount to net asset value, so the price looks right.

The Thornburg Income Builder Opportunities Trust ( TBLD ) is a rather unique closed-end fund, or CEF, that investors can purchase as a source of much-needed income to pay their bills or finance lifestyle expenses. One of the nice things about this fund is that it invests in a combination of fixed-income and equity securities.

As I pointed out in a previous article , fixed-income securities arguably cannot deliver a high enough return right now to keep up with the cost of living, so the capital appreciation potential of common equities becomes critical for anyone who is dependent on their asset portfolios. Unfortunately, the problem with common equities is that they have lower yields than fixed-income assets, and so any fund that includes them will struggle to deliver a yield that is on par with the best fixed-income closed-end funds. The Thornburg Income Builder Opportunities Trust is no exception to this rule, as the fund boasts a 7.85% yield at the current price. That compares fairly well to most common equities, but it is much lower than the double-digit yields currently sported by the best junk bond and leveraged loan funds....

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