I Would Avoid Pioneer High Income Trust At The Present Time
- PHT's premium has reached record levels and is currently sitting at 45%.
- PHT's current income is maintained through leverage and investment in lower-rated non-investment grade bonds.
- Mean reversion in PHT's premium will cause investors to suffer capital losses.
- PHT is not a bad fund, I just wouldn't buy it at the present price.
Pioneer High Income Trust's 45% Premium Looks Ripe For Contraction In 2015
- PHT's 45% premium is three standard deviations above its 1-year average premium.
- NAV performance has struggled this year, while the market price has increased 12%.
- 20% of PHT's portfolio is invested in energy-related securities, increasing the portfolio's risk.
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PHT vs. ETF Alternatives
At least 80% of its assets are invested in below investment grade debt securities, loans and preferred stocks. These securities are rated Ba/BB or lower or are unrated. Junk bonds are generally considered speculative. The investment objective is a high lev
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