KKR Income Opportunities Fund (KIO) Stock

Encinitas, California--(Newsfile Corp. - July 30, 2024) - Kiora Pharmaceuticals (NASDAQ: KPRX) ("Kiora" or the "Company") today announced it has received Orphan Medicinal Product Designation from the European Medicines Agency (EMA) for the treatment of a group of inherited retinal diseases (IRDs) that include retinitis pigmentosa (RP), choroideremia and more. The broad designation covers KIO-301, a small molecule photoswitch, for the treatment of non-syndromic rod-dominant retinal dystrophies.

KKR Income Opportunities Fund prioritizes high current income through fixed income and loan investments, offering a 10.4% dividend yield. KIO outperformed the S&P 500 in total return, despite having a portfolio full of junk rated investments. KIO's distribution is issued on a monthly basis, making it ideal for retired investors that value consistent income.

KKR Income Opportunities is a high beta fixed income CEF focused on U.S. high yield with a heavy CCC exposure. The fund's high credit risk and tight credit spreads suggest a risk-off event could result in lower prices. Active portfolio management is recommended for high beta names like KIO, with a suggestion to reduce exposure in the current market environment.

The KKR Income Opportunities Fund specializes in generating a high level of income for shareholders, with a current yield of 12.15%. The KIO closed-end fund has performed well over the past few years, with a 12-month return of 21.88% and a three-year return of 17.36%. The fund invests in a portfolio of debt securities, including senior loans and high-yield bonds, and employs leverage to boost its effective portfolio yield.

We take a look at KIO - a credit CEF which has attracted a number of misconceptions. These relate to the fund's absolute and risk-adjusted performance relative to both stocks and other credit CEFs. KIO is not an attractive holding at present given extremely low-quality allocation in an expensive credit market environment.

KIO has a good long-term record and is doing exceptionally well so far in 2023, with a year-to-date total return of 21%. Its 12% distribution is more than covered by net investment income ("NII"), with capital gains providing additional coverage. Credit markets continue to over-compensate investors for recession fears and general pessimism, as they have for quite some time.

KKR Income Opportunities Fund offers a generous 12.4% distribution yield, funded by net investment income. KIO invests in risky credit markets, leading to perennial losses on its portfolio and reducing average annual total returns to only 7.2% and 3.2% over 3 and 5 years. The author would avoid investing in 'return of principal' funds like the KIO.