Source:
2025-04-29 05:58:39 ET
Summary
- The BlackRock Floating Rate Income Trust offers a high yield of 12.03%, but its income is highly dependent on Federal Reserve interest rate policies.
- The fund's distribution is unsustainable due to declining net investment income and expected interest rate cuts, likely leading to a distribution cut.
- The market is expecting four interest cuts this year due to a recession setting in.
- The fund's distribution is already destroying its net asset value, and further rate cuts will make it even more difficult for the fund to sustain its current distribution.
- Investors should consider exiting the fund until the Federal Reserve stops easing monetary policy and the distribution becomes sustainable.
The BlackRock Floating Rate Income Trust ( BGT ) is a closed-end fund that aims to provide a way for income-seeking investors to achieve their goals and earn a substantial amount of income from the assets in their portfolios. The fund does a very good job at this, as it boasts a whopping 12.03% yield at the current share price. This is substantially higher than either the domestic investment-grade bond or the domestic junk bond indices:
Index/ETF | Current Yield |
Bloomberg U.S. Aggregate Bond Index ( AGG ) | 3.76% |
Bloomberg High Yield Very Liquid Index ( JNK ) | 6.69% |
Read the full article on Seeking Alpha
For further details see:
BGT: Failing To Cover Distributions And Unlikely To Improve (Rating Downgrade)
Carlyle Credit Income Fund 8.75% Series A Preferred Shares due 2028
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