Every week, we’ll profile a high yield investment fund that typically offers an annualized distribution of 6-10% or more. With the S&P 500 yielding less than 2%, many investors find it difficult to achieve the portfolio income necessary to meet their needs and goals. This report is designed to help address those concerns.
Diversification has been something of a dirty word in the financial markets for the better part of the past two years. In 2022, when the Fed was kicking off its most aggressive rate hiking cycle in history, stocks and bonds both fell more than 20% at the same time, providing no diversification benefits at all. Even in 2023, stocks & bonds moved together more often than not and, again, largely failed to be a counter-risk asset to each other. The early stages of 2024 have seen the S&P 500 and long-term Treasuries moving in opposite directions again, but the fact that it’s been a “tech only” rally up to this point doesn’t make this behavior all that encouraging.
Diversification across stocks and bonds, domestically and internationally is still an important component of investing. Conditions of the past couple of years shouldn’t have investors ignoring the basic risk-reducing benefits of investing across asset classes and geographies. For income seekers, the Calamos Global Dynamic Income Fund (CHW) may be a good solution. Its diversified mix across several different asset classes should help diversify away some risk over the long-term, which could be a major benefit as equity market gains turn very narrow and the risks of a major credit event persist. This is one of those funds, however, that we need to make sure is built the right way in order to be beneficial.
Fund Background
CHW seeks to provide a high level of current income with a secondary objective of capital appreciation. The fund has maximum flexibility to dynamically allocate among equities, convertible bonds, fixed-income securities and alternative investments around the world. It aims to provide consistent income through monthly distributions set at levels the investment team believes are sustainable. By investing at least 40% and up to 100% of managed assets in foreign securities, including emerging markets, the fund blends global securities, endeavoring to maintain an optimum risk/reward profile. The fund also utilizes leverage in order to enhance yield and total return potential.
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