PCN: This Expensive Bond Fund Could Struggle To Beat Inflation

Power HedgeInvesting Group LeaderFollow5ShareSavePlay(38min)CommentsSummaryThe PIMCO Corporate & Income Strategy Fund offers a 10.79% yield but trades at a 6.76% premium to NAV, raising valuation concerns.PCN's portfolio is heavily weighted to floating-rate loans (39.5%) and fixed-rate bonds, exposing income to further rate cuts and inflation risks.Despite strong nominal performance versus peers, PCN failed to beat inflation over five years, delivering negative real returns.Distribution coverage is tight, relying on unrealized gains, and the fund's premium to NAV is the highest among peers, reducing its appeal at current prices.Looking for a helping hand in the market? Members of Energy Profits in Dividends get exclusive ideas and guidance to navigate any climate. Learn More »PM Images/DigitalVision via Getty Images The PIMCO Corporate & Income Strategy Fund (PCN) is a closed-end fund that income-seeking investors may consider as a method of achieving their goals and earning an attractive level of income from the assetsThis article was written byPower Hedge16.07K 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.