XFLT - XFLT: A High Income Alternative Yield Play

2024-01-29 09:25:19 ET

Summary

• XAI Octagon Floating Rate & Alternative Income Term Trust had a strong performance in 2023, rebounding from the year prior.
• The fund has recently received shareholder approval to switch to a perpetual fund from a term-structured fund.
• The fund's distribution coverage for FY 2023 was around 90%, but the shortfall was easily 'covered' further by unrealized and realized gains in the portfolio.

Written by Nick Ackerman, co-produced by Stanford Chemist.

XAI Octagon Floating Rate & Alternative Income Term Trust ( XFLT ) (soon to be renamed to XAI Octagon Floating Rate & Alternative Income Trust) closed out quite an incredible 2023, seeing a significant rebound from the prior year. 2022 saw both equities and fixed income take a significant hit, which XFLT wasn't able to escape.

The solid performance was also thanks to the higher rate environment that started to kick in, delivering a punch to XFLT's portfolio income generation. The fund holds an overwhelming majority of floating rate instruments. Being able to generate higher income took the natural course of being able to deliver higher total returns for the year....

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