CLO Closed-End Funds: Baby Bonds And Preferred Offering Steady Income

(10min)

Summary

  • Collateralized loan obligation closed-end fund preferreds and baby bonds can offer relatively secure sources of income generation for investors.
  • These offerings are subject to stricter regulations under the 1940 Act, limiting leverage and that can provide more security to these instruments.
  • New offerings since our last update include EICC and CCIA, which naturally came with higher issued yields thanks to the higher rate environment.
  • This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Learn More »

Businessman hand showing percentage icon and up or down arrow rising bank interest rates

Suchat longthara

Written by Nick Ackerman, co-produced by Stanford Chemist.

Last fall, risk-free rates were climbing, and fixed-income instruments such as preferreds and baby bonds were also getting pressured lower. At that time, we had taken a look at some closed-end fund ("CEF") preferreds

At the CEF/ETF Income Laboratory, we manage closed-end fund (CEF) and exchange-traded fund (ETF) portfolios targeting safe and reliable ~8% yields to make income investing easy for you. Check out what our members have to say about our service.

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This article was written by

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Nick Ackerman is a former financial advisor using his experience to provide coverage on closed-end funds and exchange-traded funds. Nick has previously held Series 7 and Series 66 licenses and has been investing personally for over 14 years.

He contributes to the investing group CEF/ETF Income Laboratory along with leader Stanford Chemist, and Juan de la Hoz and Dividend Seeker. They help members benefit from income and arbitrage strategies in CEFs and ETFs by providing expert-level research. The service includes: managed portfolios targeting safe 8%+ yields, actionable income and arbitrage recommendations, in-depth analysis of CEFs and ETFs, and a friendly community of over a thousand members looking for the best income ideas. These are geared towards both active and passive investors. The vast majority of their holdings are also monthly-payers, which is great for faster compounding as well as smoothing income streams. Learn More.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of ECC, OXLC, XFLT, EIC, XFLT.PR.A, OXLCP either through stock ownership, options, or other derivatives. 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.

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