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Mon, Aug. 11, 11:53 AM
- The average yield has jumped to 5.77% today from 4.85% on June 24, and Barron's Michael Aneiro notes the two most popular ETFs - JNK and HYG - briefly traded at up to 2% discounts to NAV last week, though these disappeared pretty quickly.
- Not disappearing - and in fact growing - are discount to NAVs in some high-yield closed-end funds, with many now trading at double-digit discounts. Among some of the larger funds, writes Aneiro, the BlackRock Corporate High Yield Fund (HYT +1.7%) trades at a 10.2% discount to NAV and the AllianceBernstein Global High Income Fund (AWF +0.8%) sells for a 9.9% discount. The Western Asset High Income Fund II (HIX +1.1%) offers a 2.7% discount.
- ETFs: HYG, JNK, HYLD, SJB, IHY, ANGL, HYLS, PGHY, HYXU, UJB, XOVR, QLTC, IJNK
Thu, Feb. 27, 3:29 PM
- Typically dominated by individual investors seeking a yield, closed-end debt funds have become the latest hedge fund playground as they seek to profit from assets trading at their widest discounts to NAV since the financial crisis.
- Behind the discounts was last year's big jump in interest rates which sent the value of fixed-income assets way down. Too far down, say the hedge funds.
- Boaz Weinstein's Saba Fund (known among other things for landing the London Whale), has amassed $847.3M in publicly traded funds since beginning to buy last year. Pine River Capital has loaded up on nearly $160M worth.
- Among Weinstein's purchases are $75.7M of Pimco's Dynamic Credit Income Fund (PCI +1%) - making Saba the largest holder - $78.5M of BlackRock's Corporate High Yield Fund (HYT +0.3%), and $41.5M of BlackRock's Credit Allocation Income Trust (BTZ +0.6%).
- Also a large owner of PCI and HYT, Pine River has 1.4M shares of DoubleLine's Income Solutions Fund (DSL +1.6%).
- The magnitude of these purchases is unprecedented, says Warren Antler who specializes in CEF analysis at AST Fund Solutions.
HYT vs. ETF Alternatives
The primary investment objective is to seek current income, but it also seeks to provide stockholders with capital appreciation. Under normal market conditions, it will invest at least 80% of its total assets in high yield debt instruments, including high
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