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Closed-End Fund PGP And PHK - 11% Yields Worth It?

Apr. 11, 2018 4:01 AM ETPIMCO Dynamic Income Fund (PDI), PGP, PHK47 Comments


  • PGP and PHK continue to trade at premiums that are unjustified.
  • Both funds have had distribution cuts and more should be in the future.
  • PCI is the only Pimco fund I would want to take a chance on at this time.

Pimco funds are popular funds to hold in the CEFs space but I think you're better off in other holdings at this time. I know I will get a lot of criticism for not wanting to hold these funds at this time.

Pimco High Income Fund (NYSE:PHK) is a fund that utilizes a strategy of multiple fixed income sectors to achieve it's stated objective of seeking high current income, with capital appreciation as a secondary objective. PHK has $1,139 million in assets and has an inception date of 4/30/2003. PHK is using 25.05% leverage.

Pimco Global StocksPLUS & Income Fund (NYSE:PGP) has an objective of seeking total return comprised of current income, current gains, and long-term capital appreciation. While "Stocks" in it's name is misleading, because this fund holds no equities from what the funds website shows as of February 28, 2018 and also picture below. PGP currently utilizes 25.80% leverage.PHK

Source - PHK Fund Website

One of the major risks with these funds is the Fed raising interest rates when they hold virtually all interest rate sensitive investments, which will just increase the NAV yield more on these funds that are already paying out too much at this time, more on distributions below. I don't believe bonds are going to perform well until we are out of an interest rate hike cycle and with the economy on track to continue to keep momentum through 2018 I don't foresee these two funds performing well going forward.


Both funds are trading at significant premiums, PGP currently has a 26.04% premium and PHK is showing 18.50% premium. These two funds have long traded at premiums, however, with distribution cuts recently that premium has begun to erode. I expect it will continue this trend.PGP

Source - CEFconnect

PGP's premium and discount over

This article was written by

Nick Ackerman profile picture
CEF/ETF income and arbitrage strategies, 8%+ portfolio yields
Nick Ackerman is an avid student of the markets and has been investing in his own accounts for over 14 years. He is a former Financial Advisor and has previously qualified for holding Series 7 and Series 66 licenses. These licenses also specifically qualified him for the role of Registered Investment Adviser (RIA), i.e., he was registered as a fiduciary and could manage assets for a fee and give advice. Since then he has continued with his passion for investing through writing for Seeking Alpha, providing his knowledge, opinions, and insights of the investing world. His specific focus is on closed-end funds as an attractive way to achieve income as well as general financial planning strategies towards achieving one’s long term financial goals.


I provide my work regularly to CEF/ETF Income Laboratory with articles that have an exclusivity period, this is noted in such articles. CEF/ETF Income Laboratory is a Marketplace Service provided by Stanford Chemist, right here on Seeking Alpha.

Analyst’s Disclosure: I am/we are long PCI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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