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.

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.

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The BlackRock Core Bond Trust offers a high yield of 8.57%, outperforming the Bloomberg U.S. Aggregate Bond Index. Investment-grade bonds have struggled to provide a reasonable return over the past decade, but this particular fund has done okay in this respect. The fund's leverage has decreased, reducing potential risks, and its distribution has been covered by net investment income and capital gains.

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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.

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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.

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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.

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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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BHK is a leveraged CEF focusing on fixed-income securities.

News for Blackrock Core Bond Trust ETF (BHK)