Blackrock Core Bond Trust

BlackRock Core Bond Trust operates as a closed-end investment fund. The firm intends to provide current income and capital appreciation. Its investments include a broad range of bonds, including corporate bonds, US government and agency securities and mortgage-related securities. The company was founded on November 30, 2001 and is headquartered in Wilmington, DE.

iShares iBoxx $ Investment Grade Corporate Bond ETF

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Bonds are back, baby. Let's talk about three funds that pay—between 8.3% and 10.9%.

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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.

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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.

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For the second consecutive month, both equity (+3.42% on a NAV basis) and fixed income (+3.14%) CEFs on average posted plus-side returns. At month end, 9% of all CEFs traded at a premium to their NAV, with 9% of equity CEFs and 8% of fixed income CEFs trading in premium territory. Developed Markets CEFs (+6.45%), for the second straight month, outpaced the other classifications in the equity CEF universe for December.

The Month In Closed-End Funds: December 2023

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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.

Closed-End Funds: Investment-Grade Corporate Fixed-Income Exposure To Consider

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.

BHK: Risks May Be Higher Than The Market Believes

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.

BHK: Investment Grade Portfolio May Struggle To Maintain 8.7% Yield

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: Declining Assets And Market Seems Overly Optimistic

BHK is a fixed income CEF. The fund is composed of Treasuries, Agency MBS bonds and investment grade corporate names.

BHK: 8% Yield By Holding Over 43% AAA Assets

Investors are in desperate need of additional income to maintain their standard of living in today's environment of high inflation. BlackRock Core Bond Trust invests in a bond portfolio and applies leverage to boost the overall yield of the portfolio.

BHK: 2 Years Of Declining NAV Spells Trouble For The Distribution

BlackRock Core Bond Trust invests primarily in investment-grade bonds, which may make it more appealing than other high-yielding bond funds. The fund appears to have minimal risk of loss due to defaults.

BHK: Sometimes Waiting On The Sidelines Is Best

BHK is a fixed income CEF focused on Treasuries and Investment Grade bonds. The fund runs a high duration of 9.8 years and has been pummeled on NAV and performance this year due to the rise in interest rates.

BHK: We Are Not There Yet

Black Hills' (BKH) unit Black Hills Energy has chalked out a plan to lower emission by 90% by 2030 from the 2005 levels. It has also submitted the 2030 Ready Plan, to the Colorado Public Utilities Commission.

Black Hills' (BHK) Arm Plans to Reduce 90% Emission by 2030

BHK is a fixed income CEF focused on Treasuries and investment grade bonds. Since our Sell rating, the fund has lost more than 10% on a price basis.

BHK: Moving From Sell To Hold On This CEF After The Rout

BHK is a fixed income CEF focused on Treasuries and investment grade bonds.

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A reliable selection criterion for building a portfolio of funds that are likely to produce above-average returns over the long haul is the goal of every CEF investor. For me, the flexible combination of a positive NAV since inception, discount on NAV, and leverage represents a practical rule of thumb for long-term CEF investing.

CEF Focus Investing - My Rule Of Thumb In Action

Investors continue to struggle with generating any degree of income off of the assets in their portfolios. BHK invests in mostly high-quality investment-grade bonds, particularly U.S. Treasuries, so is able to keep its default rate incredibly low.

BHK: A Leveraged Bond Fund For Risk-Averse Income Seekers

BHK is a diversified bond fund. It is also one of the strongest, safest bond funds in the market today.

BHK: Diversified Bond Holdings, Strong 5.4% Distribution Yield, Market-Beating Returns

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Fixed income CEF discounts continue to tighten and are approaching 20-year highs. This won't last for long. Part II of this report will focus on when this ends.

CEF Report June 2021 | The Winch Tightens Further

The BHK fund has generated strong returns supported by the low interest rate environment and fundamental tailwinds towards investment grade bonds. The fund appears expensive considering a historically narrow discount to NAV and also tight distribution yield which warrants caution.

BHK: Narrowing Spread To NAV And Rising Rates Highlight Risks

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If you’re looking to boost your portfolio’s income stream, look at CEFs yielding 7%+

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Your 2% bonds are going to make you broke. You need to buy these safe, higher paying dividends instead.

News for Blackrock Core Bond Trust ETF (BHK)