BIT: Better Than A Bond Index Fund, But Still Expensive

Summary

• Rising yields and inflation risks make U.S. dollar-denominated bonds unattractive, challenging the traditional safe-haven status of bond funds.
• BlackRock Multi-Sector Income Trust offers a high yield and outperforms indices on total return, but lags closed-end peers and has high U.S. dollar exposure.
• Recent market shocks and downgrades highlight heightened risks for bondholders, with leverage amplifying downside in volatile environments.
• The BIT closed-end fund is heavily invested in junk bonds, which may be a better holding than investment-grade bonds as long as the default risk is managed.
• Despite a slight discount to NAV, BIT remains expensive versus peers and recent prices; I recommend waiting for a wider discount before considering an entry.
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.