PTY: The Ultra Safe and Ultra High Yield Dividend Fund

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Currently yielding 9.6% yield, the PTY CEF is a cornerstone of any high-yield retirement investmentent portfolio. And for good reason as since its inception, PTY has run circles around the S&P 500. That impressive performance alone might be enough reason for many to make PTY a holding. However, there is more to it. As the whole goal of PTY is to use an income-focused investment style where we generate large amounts of current income. Today I will give a full analysis of this Pimco fund including the investments risks, advantages, and how it compares to other investments out there.

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Now let's first lay out exactly what the structure of the fund is. So PTY is a fixed-income CEF, in other words they invest primarily in various types of debt that trade on the secondary market. The price that PTY pays for debt is often different from the face amount – the amount that the borrower owes. PTY is an actively managed fund, so while they always have the option to hold debt until maturity, PTY frequently buys debt below face value and then sells it when the price increases. The largest benefit you get from investing in PTY is PIMCO. PTY has outperformed because their experts have been able to identify opportunities where prices are lower than the actual risk calls for. Here's a look at PTY's current allocations. The top three sectors are mortgages, high-yield credit and investment-grade credit. We recently discussed mortgages in depth regarding PTY's sister fund PIMCO Dynamic Credit Income Fund (PCI). Everything I said there applies to PTY's mortgages as well.

Now as with any income fund, dividend safety is a front and center issue amongst investors. Now PTY was able to maintain its dividends/distributions through the most difficult of times, even in the Great Financial Crisis of 2007-2008. It has raised its several times since. Even following the COVID-19 crash, PTY has continued to maintain their $0.13/month distribution and we fully expect that to continue. For PTY, this kind of market volatility is an opportunity. This is not a fund that buys and holds until maturity, this is a fund that's actively managed and always is looking for opportunities that can result either in improved income or in capital gains. It's periods of volatility that create the mispricings for PTY to take advantage of. This is when in the years following the GFC, PTY dramatically outperformed the market and was able to pay much larger than average "special dividends". This cycle is no different. PTY is taking advantage of the volatility, whether investing in distressed companies with debt trading for pennies on the dollar or snagging debt in a premium company like BA before the price rises, PTY relies on their ability to identify when the price doesn't match the underlying long-term value. For investors, this means that PTY is capable of generating substantial returns, enough to cover their dividend/distribution in any market condition. The reason is simple: Management is involved in active trading of securities and this is why they are able to generate high income through spreads, through thick and thin. When turmoil hits the debt markets, PTY has historically been able to position themselves to outperform during recovery. This makes PTY a reliable cash machine for income in good and bad economic times.

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Links included in this description might be affiliate links. If you purchase a product or service with the links that I provide, I may receive a small commission. There is no additional charge to you!

This video is not intended as financial advice nor should be used as a substitute for your own research. Please consult a certified investment professional before making any decisions.

Видео PTY: The Ultra Safe and Ultra High Yield Dividend Fund канала Finance Theory