BNY Mellon High Yield Strategies Fund (DHF) Stock

The broader market indexes continue to hit all-time highs, with broader participation continuing into September. Every month, I add to my positions in my closed-end fund portfolio to grow my cash flow month after month. The main theme this month, which has been most of the theme this year, was adding to funds that should benefit from a lower rate environment.

BNY Mellon High Yield Strategies Fund offers a diversified portfolio of below-investment-grade debt, with geographic diversification in U.S. and European markets. The fund's discount has narrowed, boosting total returns, but it remains a relative bargain in the high-yield CEF space. DHF's distribution is fully covered even after raising the monthly payout earlier in the year, delivering an 8.05% distribution yield to investors.

BNY Mellon High Yield Strategies Fund has increased its distribution thanks to strong distribution coverage. DHF also trades at an attractive valuation, making it a potential option for investors in the high-yield market. The fund's performance has been respectable compared to its benchmark, but as a leveraged fund, it will be more volatile.

Credit Suisse High Yield Bond Fund and BNY Mellon High Yield Strategies Fund offer high monthly distributions and are trading at attractive discounts. Both funds utilize leverage to increase their potential returns and income-generation, but this comes with increased volatility and now higher borrowing costs. DHY has a stronger performance track record, but DHF looks like the better value today with strong distribution coverage as well.

BNY Mellon High Yield Strategies Fund offers a 7.76% yield, but other junk bond funds have considerably higher yields. The DHF closed-end fund has delivered impressive performance in recent months, but the market may have overpriced junk bonds. Investors may be better off selling the fund and purchasing higher-yielding peers to reduce risk and potentially maintain income.

Active management has had a strong 2023 so far, attracting about 30% of inflows, despite representing less than 6% of total assets invested in ETFs. Strong performance has drawn much of those inflows, as active managers have been able to outperform passive strategies in this year's churning markets.