BCAT: A Better 20% Yielder, But Still Not A Safe One
The BlackRock Capital Allocation Term Trust (BCAT) provides a nearly 20% distribution rate, which raises concerns about its sustainability. While the fund is considered higher quality than many of its ultra-high-yield counterparts due to its diversified and unlevered structure, it still faces risks. Investors should be cautious of the potential impact of heavy return of capital (ROC) and weak price gains on the fund's net asset value (NAV).
- ▪BCAT offers a nearly 20% managed distribution rate.
- ▪The fund is diversified and unlevered, making it higher quality than many peers.
- ▪Concerns arise from heavy ROC, weak price gains, and potential NAV erosion.
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