BTZ: Fed Cuts By 25 Basis Points, But Don't Blindly Jump In
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Power HedgeInvesting Group LeaderFollow5ShareSavePlay(28min)CommentsSummaryThe BlackRock Credit Allocation Income Trust offers a 9.31% yield, but underperforms peer multi-sector bond funds in both yield and five-year total return.BTZ relies on leverage and active trading, with 76.64% investment-grade holdings, but covers distributions partly through unrealized gains, raising sustainability questions if market conditions turn.Despite recent Fed rate cuts, persistent inflation limits upside for BTZ; bond price appreciation likely requires further Fed intervention or lower inflation.BTZ trades at a 4.66% NAV discount, slightly above its long-term average and peer median, suggesting a better entry point may emerge if valuation reverts. PM Images/DigitalVision via Getty Images The BlackRock Credit Allocation Income Trust (BTZ) is a closed-end bond fund that investors may opt to purchase in order to earn a very high level of income from the assets in theirThis article was written byPower Hedge15.91K FollowersFollowPower Hedge has been covering both traditional and renewable energy since 2010. He targets primarily international companies of all sizes that hold a competitive advantage and pay dividends with strong yields. He is the leader of the investing group Energy Profits in Dividends where he focuses on generating income through energy stocks and CEFs while managing risk through options. He also provides micro and macro-analysis of both domestic and international energy companie. Learn more.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You