Yuji Sakai The DoubleLine Yield Opportunities Fund ( NYSE: DLY ) is a closed-end fund aka CEF that income-focused investors can purchase as a method of achieving their goals. As is the case with most income-focused funds, the DoubleLine Yield Opportunities Fund invests primarily in debt securities. This is both a good thing and a bad thing.
The good thing comes from the fact that fixed-income securities have significantly higher yields than common equities. We can see this by looking at the trailing twelve-month yields of a few fixed-income indices: Index and ETF Tracking the Index TTM Yield Bloomberg U.S.
Aggregate Bond Index ( AGG ) 3.40% Bloomberg High Yield Very Liquid Index ( JNK ) 6.60% Vanguard World Bond Index ( BNDW ) 4.
05% J.P. Morgan EMBI Global Core Index ( EMB ) 4.
85% Click to enlarge These yields are all considerably higher than those of the major domestic stock indices: Wall Street Journal Thus, the fact that the DoubleLine Yield Opportunities Fund invests primarily in fixed-income securities should allow it to generate a higher level of income from a given principal value than it would be able to achieve if it invested in common stocks. Unfortunately, the problem with this is that fixed-income securities do not hold their value as well as common stocks during periods of high inflation. As such, investors in these securities may lose purchasing power over time regardless of the yield if inflation rates are high enough.
As I pointed out in a recent article , thi.
