Where has all the yield gone?

The last 12 months have seen significant yield compression in the closed-end fund space. In fact out of all the sectors we track, only three have increased in yield and by a very small amount. While this move benefits the portfolios of CEF investors, it also detracts from future performance in terms of new opportunities as well as yield on reinvested capital.

The top right-hand corner is most attractive representing high yield and a yield increase over the last 12 months. Unfortunately, there are no funds in that quadrant currently.

Currently we see value in Mortgage Bond, Senior Loan funds and National Municipal sectors. The MLP sector looks appealing on an absolute yield basis, however the compression we have seen over the last few months suggests cashing in some chips.

 

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