Barings Global Short Duration High Yield FundNYSE: BGH

The Barings Global Short Duration High Yield Fund offers an 8.42% yield and has outperformed bond indices, making it a strong choice for income-focused investors. Despite a yield decline, the BGH fund's performance and market confidence in its distribution sustainability remain strong, supported by a diversified portfolio of short-duration bonds. The fund effectively utilizes leverage to enhance returns while maintaining a reasonable risk level, with a current leverage ratio of 21.85%.

Many investors oversimplify the investment process with respect to duration by thinking about the concept on a single spectrum. They also focus overly on today's yield rather than considering reinvestment risk as well as capital gains consequences. We discuss two of these investment process shortcomings and highlight a number of attractive holdings in the context of the current market environment.

Barings Global Short Duration High Yield Fund offers exposure to high-yield bonds and loans with a focus on short duration. BGH continues to trade at an attractive discount, with a well-covered distribution that's paid monthly to investors. Given the strong distribution coverage with a modest NAV rate, the fund could increase its distribution or pay a year-end special.

Barings Global Short Duration High Yield Fund offers a fully covered double-digit distribution yield and trades at a double-digit discount. The fund's focus on shorter durations has helped its performance compared to other fixed-income investments during the current rate environment. BGH's portfolio has a higher allocation to lower credit quality issuers, but its diversified exposure and discounted portfolio reflect some of the heightened credit risk.