DHF: Risks Are Too Great For A Contrarian Purchase

2025-04-23 17:53:27 ET

Summary

• The BNY Mellon High Yield Strategies Fund offers an 8.82% yield, but underperforms compared to other junk bond funds and faces risks from potential economic recession and inflation.
• Current economic conditions, including recession fears and inflation expectations, make junk bonds risky, with the fund's share price down 6.67% year-to-date.
• Economists and banks think that there is a high probability of a recession, but businesses are not acting like a recession is a near-term probability.
• The fund's valuation is at an 8.61% discount to net asset value, higher than its historical average, suggesting potential further downside.
• The fund's expense ratio remains high at 3.73%, and overall, the risks outweigh potential opportunities unless investing money you can afford to lose.

The BNY Mellon High Yield Strategies Fund ( DHF ) is a closed-end fund that may attract interest from investors who are seeking to earn a high level of income from the assets that they already possess. The fund is reasonably decent at providing its investors with income, as it boasts an 8.82% yield at the current share price. This is a reasonably impressive yield when compared to the domestic investment-grade and junk bond indices:

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