BLW: A High-Yield Closed-End Fund for Fixed-Income Exposure

BlackRock Limited Duration Income Trust (NYSE:BLW) is a closed-end fund offering high income from fixed-income securities without taking on duration risk. BLW is a good option for investors seeking debt exposure if the price falls. It provides a stable source of income and can help diversify a portfolio.

In an era of low interest rates and volatile markets, investors are increasingly seeking stable sources of income. The BlackRock Limited Duration Income Trust (NYSE: BLW) offers an appealing solution for those looking to generate high income from fixed-income securities without taking on duration risk. This closed-end fund aims to provide investors with a method to obtain a very high level of income while mitigating the risks associated with longer-term bonds.

The BlackRock Limited Duration Income Trust boasts a 9.77% yield, significantly higher than major fixed-income indices such as the Bloomberg U.S. Aggregate Bond Index (3.83%) and the Bloomberg High Yield Very Liquid Index (6.63%) [2]. This yield is achieved through a portfolio with an effective duration of only 1.99 years, meaning the typical asset in the fund's portfolio will repay the initial investment in about two years. This short duration provides significant inflation protection, as the purchasing power of the U.S. dollar is expected to decline less in two years than in longer periods [2].

Investors in the BlackRock Limited Duration Income Trust can expect a stable source of income, with the fund's distribution history indicating no significant cuts. The fund's median yield compared to its peers further supports its sustainability, as it does not appear to be priced for a distribution cut [2]. This stability makes BLW an attractive option for investors seeking debt exposure, especially if the price of longer-term bonds falls.

In conclusion, the BlackRock Limited Duration Income Trust offers a high-yield, low-risk income option for investors. Its short duration and high yield provide significant inflation protection and a stable source of income, making it a good choice for diversifying a portfolio in a low-interest-rate environment.

References:
[1] https://ca.finance.yahoo.com/news/want-decades-passive-income-2-194500790.html
[2] https://seekingalpha.com/article/4795799-blw-good-option-for-debt-exposure-if-price-falls