The BlackRock Core Bond Trust aims to provide high current income and capital appreciation through diversified fixed income investments. The product focuses on investment-grade bonds but also has exposure to high-yield securities. BHK is currently trading at a premium to NAV, while most peer funds trade at a discount to NAV.
The BlackRock Core Bond Trust has a yield of 8.57%, which is higher than the Bloomberg U.S. Aggregate Bond Index. While investment-grade bonds have not been very profitable in recent years, this fund has managed to perform well. The fund's leverage has been reduced to lower risks, and its distributions have been supported by net investment income and capital gains.
The BlackRock Core Bond Trust is a closed-end fund that primarily invests in investment-grade assets, making it a low-risk option for income-focused investors. Despite investing in safer assets, the fund has been able to maintain a yield of 8.27%, comparable to junk bond funds. The fund has delivered a solid performance, with a 6.08% increase in share price since November 2023 and a 7.56% total return for investors.
Here's the thing about high-yield closed-end funds (CEFs): sometimes a CEF will seem to have all the earmarks of a terrific investment: high (and monthly) dividends, reasonable fees and reputable management. But it'll still come up short.
Investment-grade corporate-focused closed-end funds offer attractive fixed-income options with higher yields in the current higher-rate environment. Leverage and discounts/premiums in CEFs add volatility to consider when investing in these funds, which would otherwise be for more conservative investors. Besides the higher yields, when rates decline investment-grade funds should see a significant rebound, adding a catalyst for potential upside and 'locking in' higher yields now.
The BlackRock Core Bond Trust offers a high yield of 8.82%, higher than U.S. Treasury securities and major bond indices. The fund's share price has declined 5.67% since July, worse than the Bloomberg U.S. Aggregate Bond Index. The fund primarily invests in investment-grade securities, distinguishing it from high-yielding funds that invest in riskier assets.
The BlackRock Core Bond Trust is a closed-end fund that offers an 8.7% distribution yield from mostly investment grade securities. The fund's historical returns have been boosted by capital gains from a secular bond bull market, but with rising interest rates, this may no longer be sustainable. I believe a more realistic range of returns and distribution yields may be 5-6% for the BHK fund. Anything beyond that may cause an amortization of NAV.
Investors are in desperate need of income to maintain their standard of living in the current environment. BHK invests in a portfolio of reasonably safe bonds to provide a nice level of income for investors. The market appears to be betting on near-term rate cuts, which directly contradicts the Fed's statements.
BHK is a fixed income CEF. The fund is composed of Treasuries, Agency MBS bonds and investment grade corporate names.