First Trust Strategic High Income II is traded on the New York Stock Exchange under the symbol FHY. First Trust Advisors is the investment advisor with the sub-advisor being Brookfield Investment Management. The fund was launched on March 28, 2006. During its last fiscal year, ending October 31, 2011, it did very well and as a result the discount has narrowed to 5.90% as of January 10, 2012.
Previously, the discount had been in excess of 10% and even hitting 15%. It is a typical fund for high yield investing and has decent management. I simply believe that the discount has narrowed too much because of its performance last year. I would wait for the discount to again increase.
Performance statistics for last fiscal year, 3 years and inception, are as follows:
|Net Asset Value||13.60%||(10.80%)||(8.14%)|
|Barclays B A High Yield Index||5.36%||8.79%||8.79%|
As of October 31, 2011, the fund's capital structure was as follows:
|Total Investments (136.70%)||$179,242,571|
|Outstanding Loans (41.50%)||($54,400,000)|
Last fiscal year's ratios were as follows:
|Expenses to net Assets||2.35%|
|Expenses, less interest expense||1.93%|
|Net investment income||9.65%|
Asset classification was as follows:
|Commercial mortgage backed securities||10.2%|
|Residential mortgage backed securities||9.2%|
|Foreign corporate bonds||3.6%|
|Manufactured housing loans||3.3%|
Credit quality was disbursed but primarily running from BB to B-, roughly as follows:
Its tax position reflects years of poor performance and there is a substantial tax loss carry forward, as follows:
|Accumulated net investment income||$1,890,330|
|Accumulated net losses||($79,567,755)|
|Net unrealized appreciation||$2,228,744|
The portfolio is well diversified and is typical of most high yield funds. I would only invest when the discount increased to the 15% level. There is ample time to sit and wait.