BCAT: Multi-Asset Fund Provides Hefty Distribution Yield (Rating Downgrade)

2025-01-05 13:30:00 ET

Summary

• BCAT delivers a sizeable distribution yield thanks to its 20% managed distribution policy, which seemed to have helped the fund's discount narrow since our prior update.
• This policy, along with a discount management program, was implemented due to activist pressure from Saba Capital Management, but Saba has recently reduced its stake.
• Due to recent market volatility, the fund's share price has fallen along with its underlying portfolio; further, its discount has also widened once again, making it a more interesting choice.

Written by Nick Ackerman, co-produced by Stanford Chemist

BlackRock Capital Allocation Term Trust ( BCAT ) is a highly diversified closed-end fund that provides exposure to both equity and fixed-income investments. They have the ability to invest without almost any constraints in terms of allocations across asset classes and within any sector weighting. The fund managers also have the ability to employ a variety of derivatives, including going short or long options and futures contracts, as only a couple of examples. The fund also isn't limited to geographic regions, but the underlying portfolio is dominated by U.S. exposure....

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